Volatile stock market trading is expected this week given a tug-of-war between local corporate earnings and geopolitical tensions abroad.
Gains will be tempered by profit taking and cautiousness amid the ongoing traditional Chinese ghost month, analysts said.
“The coming week will keep investors guessing,” said Justino Calaycay Jr., an analyst at Accord Capital Equities Corp.
“Financial market sentiments continue to try to strike a balance between and among geopolitical tensions, overseas markets’ performance, corporate earnings, the domestic economy and the changing political landscape,” Calaycay said.
Astro del Castillo, managing director of First Grade Finance Inc., said share prices might post slight gains depending on corporate earnings.
“We will also look at developments overseas because fears of a hike in oil prices are still there,” Del Castillo said.
Business ( Article MRec ), pagematch: 1, sectionmatch: 1
In a market report, online brokerage firm 2TradeAsia.com pegged the immediate support at 6,800 and resistance at 6,900-6,910.
Week-on-week, the Philippine Stock Exchange index fell 0.2 percent or 13.89 points to 6,880.34, snapping two consecutive week of gains. Gains in mining and oil (+3.8 percent) were offset by the service sector (-1.43 percent) while net foreign selling widened to P594 million from P46 million a week ago.
Local equities were dragged by regional events, including US airstrikes in Iraq and Russia’s move to amass combat-ready troops near Ukraine. Russia also banned food imports from US and the European Union.
“Eyes will be set on regional events, specifically on sequels to the US administration’s airstrike in Iraq. For now, participants will set their attention on Wall Street’s movement, given the volatility at the foreign exchange and crude futures markets,” 2TradeAsia.com said.
While conglomerates like Metro Pacific Investments Corp., San Miguel Corp. and Ayala Corp. will report first half results this week, investors will seek indications on the second half performance.
“Quarter-on-quarter improvement in corporate earnings will be assessed, but most are bound to validate second half prospects,” 2TradeAsia.com said.
The brokerage firm said gains will be tempered by profit taking during rallies given expected slower third quarter and the ongoing traditional Chinese ghost month.
“The relatively weaker results out so far do not provide much hope, but surprises will be welcomed,” Calaycay said.
Investors are advised to spot good entry levels in issues that are likely to be near-term favorites, 2TradeAsia.com said.
“Generally, even as we remain cautious, our general stance continues to be to accumulate select counters,” Calaycay said.
Written by: Neil Jerome C. Morales