Share prices could see a short rally as the week starts but the outcome of succeeding days will depend mainly on fresh economic data from abroad, an analyst said.
Joseph Roxas, Eagle Equities Inc. president, said a Wall Street rally on Friday, propelled by higher oil prices and solid US retail sales, would have a short-term positive effect on the Philippine Stock Exchange (PSE).
“The tendency of the local stock market is to move higher with regard to the early part of the week … remaining trading days would mainly be driven by local economic activities,” Roxas said.
Astro del Castillo, president and managing director at First Grade Finance Inc., said that while investors would be monitoring the upcoming release of China’s balance of trade data as well as Japan’s fourth quarter economic performance, the Philippines’ strong fundamentals would provide some buffer against volatility in the equities market.
“We are less vulnerable vis-à-vis our other regional counterparts given our very strong economic fundamentals. Also, for the week, strong earnings reports may likewise soften the slide in the market,” del Castillo said.
2TradeAsia.com analyst Jason Escartin, meanwhile, said investors remained anxious as the US Federal Reserve had yet to definitely indicate whether key rates would be raised next month.
“At the end of the week, US January inflation, a key factor behind the Federal Reserve’s interest rate decision, is scheduled for release,” Escartin noted.
“Fed chief [Janet] Yellen’s statement in Congress [last week]did little to assuage concerns over its tightening cycle after hinting their intent on raising key rates despite recent turmoil in financial markets. At best, investors could only expect a delay in hikes,” he added.
The benchmark Philippine Stock Exchange Index (PSEi) marginally dropped by 0.14 percent or 8.98 points to close at 6, 654.45 last Friday, while the wider All Shares slightly dipped by 0.18 percent or 6.75 points to end at 3, 839.97.
Total value turnover for the day was strong at P6.282 billion, compared with the average of P4.51 billion during the week.