Inflation, income data to guide market

MANILA, Philippines — The stock market will try to break out of the 6,700 level as investors take their cue from inflation data and corporate earnings results.

In a market commentary, 2TradeAsia said the main index is having a difficult time getting past the 6,700 level.

However, it said “inflation data and more earnings momentum from big names could help drive more activity, but ultimately brace for some lethargy on the onset of the Ghost Festival from Aug. 16 to September.”

Investors would do well to prepare for its fourth quarter strategy with consumer confidence expected to rebound “if the stars are aligned,” it added.

2TradeAsia sees immediate support at 6,500 to 6,550, with resistance at 6,700.

The Philippine Stock Exchange index (PSEi) slid by 22 points to 6,625.26, down by 0.34 percent week on week. Total value turnover was weak at an average of P3.71 billion, down by by 19.66 percent year on year.

Likewise, net foreign buying eased to an average of P61 million or down by 69.11 percent week on week.

Michael Ricafort of Rizal Commercial Banking Corp. said the next importance resistance over the past two months is at 6,700 levels as the next gateway prior to further upward correction in the near future,

Over the past five months, the first important resistance levels are at 6,730 to 6,830 levels.

2TradeAsia said corporate earnings results have come in mixed so far, but spotlight sectors are above expectations including banking and power.

“External leads that could still somewhat provide some support on market sentiment: US stock markets mostly well into bull market territory and lingered among 15.5-month highs recently (since early April 2022). From January to June 2023: US S&P 500 index was up 16 percent, the best first half performance since 2019 (before the pandemic) while the Nasdaq was up 32 percent, Ricafort added.

He also said that any breakout above 7,000 could be triggered by Fed rate cuts going forward, while noting that these cuts are realistically expected in 2024.