Overseas news seen as a driving force behind the stock market

DEVELOPMENTS abroad, especially news about the US debt ceiling talks, are expected to boost stock market movement this week, analysts said.

The benchmark Philippine Stock Market Index (PSEi), which closed 1.31 percent higher last Friday to 6,664.55, may test the resistance level of 6,700.

“The index is poised to make another attempt to breach the 6,700 to 6,750 resistance zone, where we expect profit taking to weigh on any rally,” said Juan Paolo Colet, general manager of China Bank Capital Corp.

Last week’s positive momentum could encourage investors to push prices higher, but the direction of the local market will largely depend on developments in the US, particularly the progress of debt ceiling talks and the outlook on the next Federal Reserve policy moves,” he added.

“In the near term, a timely resolution of the US debt limit could be a strong catalyst for bullish action.”

Online brokerage 2TradeAsia.com said that “U.S. GDP (gross domestic product), factory data and labor data will be highlighted this week as viewers continue to closely monitor macro indicators to gauge whether recent monetary policy moves from the Federal Reserve will support the new baseline for rate expectations. in the second half of 2023.”

“The Philippine Stock Exchange index moving in a tight range of 6,400-6,700 for most of the second quarter indicates potential price breakouts,” it added.

“While technically the breakout could go either way, strong positive catalysts could potentially propel the index towards the 7,000 level in the medium term.”

2TradeAsia suggested that investors continue to monitor intraday selling pressure as the long-term plan develops and the funds slowly gain visibility into 2024 activity.

It saw the market’s immediate support at 6,400-6,500 and resistance at 6,700-6,800.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., noted that the PSEi “continued to gain as far back as June 2023 amid the latest signals about a potential reduction in banks’ reserve requirement ratios as one of the options for changing monetary policy beyond local policy.” interest rate cut, especially if there is no rate cut by the Fed by then.”