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LOCAL STOCKS are expected to tread water this week -- returning to 7,500 level at best, or at worst, breaching the 7,300 territory that could set off a fresh bout of heavy selling after Friday's reprieve, analysts said over the weekend.

The Philippine Stock Exchange index (PSEi) managed to end last week in positive territory, up 1.06% at 7,389.30, ending a seven-day losing streak.

The market will test if Friday’s gain could be sustained to bring the bellwether index back up to 7,500 level. The first data to digest for the week -- the weekly US payrolls data which came out late Friday after Philippine financial markets closed.

"[W]e expect the PSEi to move sideways with a downward bias, should the results of the US initial jobless claims be stronger than expected and possibility of a rate hike improves... expect the PSEi to trade between 7,305 and 7,512,” BPI asset management said in a weekly outlook report released over the weekend.

US jobless claims are at a 43-year low, pointing to sustained labor market strength that could prompt the Federal Reserve to raise interest rates in December, Reuters reported.

Investors also await China’s announcement on how its economy fared in the third quarter. More earnings results from the US will provide some catalyst too.

This week, China 3Q GDP is set to be released, with 3Q16 GDP consensus at 6.7%, maintaining its growth from the past 2 quarters. If China managed to maintain or beat this pace, any concerns over faltering of economic growth could ease and boost global financial markets,” said in a weekly outlook. also said President Rodrigo R. Duterte’s state visit to China this week could be a “breath of fresh air for the economy” as the country moves to form stronger ties with Asian powerhouse.

"The trip would land promising business opportunities given the closer economic ties between the Philippines and China under the current administration. Wait until supply pressure abates and stabilizes. Immediate support is 7,300, secondary 7,250, resistance at 7,450," said.

In a phone interview on Oct. 14, AB Capital Securities analyst Victor F. Felix said:“If the positive momentum continues we’ll return to the 7,500 resistance, hopefully we’ll be able to get back to 7,500 -- 7,700.”

Regina Capital Development Corp. Managing Director Luis A. Limlingan, sounded off caution.

"The first two trading days are crucial for this week’s trade as PSEi looks to maintain its hold above 200-d MA. However, the main hurdle is the index’s high-volatility environment -- based on its 14-day average movement of (around) 85 pts., the said support can be easily breached during intraday. In addition, even if the recovery is sustained, the index is still generally trading in a downtrend so expect heavy selling pressure near/at resistance points," he said in a mobile message on Oct. 14.