Data releases seen as driving the stock market

INVESTORS are expected to take their cues from a slew of economic reports due this week, analysts said, with June’s inflation data, expected next Wednesday, seen as a high.

The benchmark Philippine Stock Exchange Index (PSEi) finished at 6,400 points last week and fell 43.42 points on Friday alone to close at 6,468.07.

Week over week, however, it outperformed 1.17 percent compared to its June 23, 2023 close of 6,393.55.

“For the next week, the movement of the local market may depend on the upcoming economic data,” said Japhet Tantiangco, senior research analyst at Philstocks Financial Inc.

“Investors can take cues from the upcoming June S&P Global Philippines Manufacturing PMI and May Labor Force Survey for clues about the strength of the local economy,” he added.

“Strong numbers could boost sentiment, which in turn could drive the market higher.”

Tantiangco noted that the PSEi managed to bounce back last week thanks to bargain hunting.

“However, with last Friday’s profit-taking, the market was unable to break its 50-day exponential moving average (EMA) and even fell below its 10-day and 20-day EMAs,” he said.

“Chart allows the market to retest its 10-day and 20-day exponential moving averages. Major support is seen at 6,400. Major resistance is seen at 6,600.”

Juan Paolo Colet, general manager of China Bank Capital Corp., said if no surprises are forthcoming, the first trading week of the second semester is likely to remain limited, with bargain hunters waiting below 6,400 and sellers heading towards 6,600.

“In terms of fundamentals, investors will be digesting some economic data this week, with June’s Philippine inflation data most highly anticipated for signs of continued easing in consumer prices,” he said.

“A large drop in local inflation, especially one that exceeds average expectations, could boost bullish trades. However, any positive market momentum will come under heavy pressure against the aggressive policies of the US Federal Reserve.”

Online brokerage 2TradeAsia.com, meanwhile, said that with the upcoming earnings season, anything positive on the macroeconomic front should help bring the PSEi back to the 6,800-7,000 level before the end of the year.

We continue to reiterate that at current levels, valuations relative to future earnings and alternative assets should remain very attractive.

“Investors should also watch for the emergence of post-consolidation technical patterns. Collect. Immediate support is at 6,400, resistance is at 6,600.”