12:06 am | Monday, July 7th, 2014
Local stocks are seen sustaining their upswing this week following last Friday’s breakout from a key barrier, supported by buoyant overseas markets.
The main-share Philippine Stock Exchange index (PSEi) last week rallied by 1.75 percent or 120.13 points to close on Friday at 6,962.28. The main index climbed for three straight days, allowing a breakout from the key resistance level at around 6,906.
BDO Unibank chief strategist Jonathan Ravelas said the local stock market followed Wall Street’s lead, in turn perked up by news of a stronger-than-expected US private sector jobs data.
“Chartwise, with the break above 6,900 and with the medium-term uptrend still intact, the index appears poised to test the 7,000-7,200 levels,” Ravelas said. However, a break below 6,800 might call for
losses toward 6,650, he said.
The local stock market has also found some relief from the lower-than-expected June inflation rate. On Friday, it was reported that the inflation rate in June settled at 4.4 percent year-on-year compared to 4.5 percent in May. This was lower than the consensus forecast of 4.6 percent.
With this inflation rate, BPI lead economist Emilio Neri Jr. said the local equity market along with fixed-rate treasury notes (FXTNs) “may be given a reprieve.”
However, if the Philippines were to report another quarter of below 6-percent gross domestic product (GDP) growth for the second quarter, Neri said this could weigh on both equities and the FXTN markets as the Philippines continued to show a “deviation from its high-growth-low-inflation sweet spot in 2012 and 2013.” Doris C. Dumlao
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