After bouncing back and fourth to the red side last week, local share prices may more likely turn even more submissive to external developments this week despite bright outlook on corporate earnings.
Jonathan Ravelas, chief market strategist of BDO Unibank Inc., said that regardless of positive corporate results, the market would remain sensitive toward what’s happening in the global markets.
“Earnings should help prop the market. But as stated, despite the recent run of good earnings, the market has still fallen. Market may still focus on Federal Reserve and China’s slowdown,” he said in a text message.
Ravelas also said that with the break of 6,630-point level, the Philippine Stock Exchange index is now heading to test the 6,000 to 6,350 levels. Moreover, Jun Calaycay, Accord Capital Equities Corp. analyst, previously said that even as the market remains fundamentally bullish, technical analysts may raise some concerns over a possible short-term bearish pattern.
“In this context, the first support level is defined at 6,630 while the ‘neckline’ is at 6,240. A break below 6,240 will confirm the pattern and thus raise the possibility of a terminal move to reverse the five-year bull,” he said.
“Yet, as we have adverted to in previous reports, we are still inclined to believe that at this point of the market, the fundamental factors will continue to hold sway, putting pressure on second-quarter numbers to validate and extend the bull further,” Calaycay added.
According to him, anything short of this expectation may provide the jump-off point for the bears to stamp their sentiments.
On Friday, the main index capped the week with a 1.91-percent drop, or 127.49 points to 6,533.95, while the wider all-shares index fell 1.76 percent, or 71.20 points to 3,982.13.
This followed a slight recovery on Thursday. Although the market is still trading sideways, Philippine shares still managed to recover after the Federal Reserve concluded its two-day policy meeting.