SECOND-QUARTER growth data, July inflation and further developments in US trade policy will likely drive market sentiment this week, analysts said.
The benchmark Philippine Stock Exchange index (PSEi) closed at at 6,306.13 last Friday, down 1.67 percent week-on-week and 3.41 percent lower since the start of the year.
This was driven by “investors’ dismay over the recent SONA (State of the Nation Address), uncertainties on the Fed’s (US Federal Reserve) policy outlook, and worries on global trade.”
President Ferdinand Marcos Jr.’s annual report to the nation was criticized over a number of omissions, including a legislative agenda, while the US central bank again decided to keep interest rates unchanged.
US President Donald Trump, meanwhile, embarked on a tariff blitz that targeted dozens of trading partners and also moved a deadline for the imposition of higher duties to Thursday this week.
“The market is exhibiting a bearish bias, forming a lower high and lower low … [and] has fallen below its 10-day, 50-day, and 200-day exponential moving averages,” Philstocks Financial Inc. research manager Japhet Tantiangco said.
“If there will be no positive catalyst … the market may continue with its decline.”
This week’s direction will likely “depend on how satisfactory the figures will be” from upcoming economic data releases, he said.
“A well-contained inflation figure and a GDP (gross domestic product) growth print significantly faster than the prior quarter’s 5.4 percent may give the market a boost.”
July inflation data will be released on Tuesday while April-June growth results are due Thursday.
“A rebound of the local currency may also help the market but a further depreciation may also bring the market lower,” Tantiangco continued.
The peso entered P58.$1 territory last week, a level not hit since February, in the wake of Trump’s tariff blitz.
Still, Tantiangco said the local market remained undervalued with a price-to-earnings ratio of 10.9x, well below its five-year historical average of 17.3x and the regional average of 17.2x.
Unicapital Group Research Head Wendy Estacio-Cruz, meanwhile, said: “All eyes are now on the release of the July inflation rate and GDP growth figures, scheduled for Aug. 5 and 7, respectively.”
“We expect the index to trade within the 6,200 to 6,500 range…”
Online brokerage 2TradeAsia.com, for its part, said further second-quarter earnings reports may provide “a fount of new data” that could drive some stocks higher.
“We expect some short-run rotation to consumer discretionary, gaming, and adjacent industries,” it said.
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