PH SHARES WEEKLY OUTLOOK

Mixed, on US rate fears, PH earnings

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Two opposing views are mainly tearing apart the stock market outlook for the week.

On the one hand, there is a cautionary note that the US jobs data may revive fears of another yield rate lift off in the world’s largest economy.

Nonfarm payrolls rose by a seasonally adjusted 151,000 in January, the US Labor Department reported on Friday. While the numbers fell short of analysts’ expectations, the figures might influence the Federal Reserve to decide on raising interest rates.

“The US just released its job data showing a spike in the average earnings of workers by 2.9 percent over the past six months, while its job growth rate slowed, there was nonetheless an increase as well. Thus, triggering fears of possible rate hike,” said Astro del Castillo, president and managing director at First Grade Finance Inc.


The Philippine market might follow the performance of Wall Street on Friday, with Dow Jones Industrial Index dropping 1.29 percent.

Should the Federal Reserve decide to increase interest rates, more investors are likely to sell their positions in the equities market, and may troop to the bond market which could promise safer and better returns.

On Friday, the benchmark PSEi picked up by 1.69 percent or 112.30 points to close at 6, 765.13, while the broader All Shares strengthened by 1.44 percent or 54.86 points at 3, 868.61.

This uptick added some 78 points to the PSEi at 6,765 or 1.16 percent week-on-week.

Alexander Adrian Tiu, senior analyst at AB Capital Securities Inc., meanwhile, noted that local investors are taking positions ahead of the earnings season.

“Besides the US job data, which may affect the local bourse, investors are likewise positioning themselves as corporate earnings reports of various companies are about to come out. Also, with cheaper valuations of share prices, investors may likely purchase than sell shares this week,” Tiu said.

Still, a third view to things comes from Leonardo Arguelles, president and chief executive officer at Unicapital Securities Inc.

The gains last week might prompt investors to pocket their profits in the early part of the week, he said.

“That is how it works. When gain is realized, investors would likely sell their shares to convert it to real earnings. So for the week, we see some investors selling take advantage of last week’s gains,” Arguelles added.

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