INVESTORS are expected to monitor developments onshore and abroad, as well as additional details on the next administration’s Cabinet members and economic policies for this trading week.
Japhet Tantiangco, senior research analyst at Philstocks Financial Inc., noted that the market was able to climb above 6,700 territory and breached its 10-day exponential moving average last week.
“While room for bargain hunting is still seen as a lot of stocks are still at attractive levels, lingering economic concerns may weigh on sentiment and cause investors to book gains from last week’s rally,” he explained.
Last week, the 30-member Philippine Stock Exchange index improved by 1.3 percent, or 86.28 points, to finish at 6,746.33 on Friday.
Tantiangco said that worries over recession risks abroad, brought by the Federal Reserve’s hawkish policy outlook amid higher inflation, might prompt negative spillovers that could weigh on the local market.
On the local front, the Bangko Sentral ng Pilipinas already started monetary tightening.
“Concerns over how hawkish our monetary policies could get amid demand-side inflationary risks may also weigh on the market,” Tantiangco said.
Investors will also be on the lookout for the economic policies of the new administration.
Chartwise, the market’s immediate support is seen at its 10-day exponential moving average of 6,672.21, as of May 20, followed by the 6,600 level.
Immediate resistance, meanwhile, is at its 20-day exponential moving average of 6,745.05, as of May 20, followed by its current 50-day exponential moving average of 6,910.11.
Regina Capital Development Corp. Managing Director Luis Limlingan said investors would be taking cues from developments abroad, including the US FOMC minutes, employment data, gross domestic product revisions and other economic releases that will give hints on inflation.
He added that the recent FTSE rebalancing might also influence price action, depending on how substantial the changes are.
Limlingan also noted that investors are on a wait-and-see mode for the Cabinet members of the next administration.
In an emailed commentary, Rizal Commercial Banking Corp. chief economist Michael Ricafort likewise cited additional details on the economic team and Cabinet of the incoming administration in view of the transition as among catalysts for the market.
Ricafort also included the release of budget deficit, the trend in global oil and commodity prices, developments in the Russia-Ukraine conflict, and trend in Covid-19 cases in the country, among others.