Stocks may extend climb despite cautious mood

PHILIPPINE STOCKS may continue to rise this week, although the market is expected to stay cautious due to lingering domestic and global uncertainties.

On Friday, the Philippine Stock Exchange index (PSEi) jumped by 1.14% or 69.10 points to close at 6,108.86, while the broader all shares index rose by 0.72% or 26.56 points to end at 3,685.85.

Week on week, the PSEi also increased by 81.74 points from its 6,027.12 close on Sept. 26, mostly driven by bargain hunting after a seven-day losing run that saw the bellwether fall below the 6,000 mark early in the week.

“The local market managed to partially recover some lost ground in last week’s trading as investors hunted for bargains. However, trading activity was thin, implying that market confidence remains weak amid lingering uncertainties,” Philstocks Financial, Inc. Research Manager Japhet Louis O. Tantiangco said in a Viber message.

“The local bourse managed to recover midweek after briefly dipping below the 6,000 level as bargain hunting and repositioning ahead of key data lifted sentiment… Low trading volumes and lackluster sentiment reflect cautious investor positioning amid global uncertainties and local politico-economic headwinds,” online brokerage 2TradeAsia.com said in a market report on Friday.

For this week, Mr. Tantiangco said investors will wait for the release of September Philippine inflation data on Tuesday (Oct. 7) and the Bangko Sentral ng Pilipinas’ (BSP) policy meeting on Thursday (Oct. 9) for leads.

“An inflation rate within the BSP’s 1.5%-2.3% projection, especially one biased towards the lower end, may give sentiment a boost. Meanwhile, a rate cut and/or signals of further policy easing in the near term are expected to help lift sentiment, too,” he said.

“The local market’s chart is still showing a bearish bias as it formed a lower low last week. On a positive note, in the market’s latest rebound, it was able to get past its 10-day exponential moving average. Moving forward, the market may try to hold its position above the said line… Major support is at 6,000.”

A ����ý poll of 12 analysts yielded a median estimate of 1.9% for September inflation, within the BSP’s 1.5-2.3% forecast for the month. If realized, this would be faster than 1.5% in August but would match the 1.9% clip in September 2024.

On the other hand, 10 of 16 analysts in a separate ����ý poll expect the Monetary Board to pause at this week’s meeting due to emerging inflation risks following three consecutive cuts that brought its policy rate to 5%. The remaining six said the BSP could deliver a fourth straight 25-basis-point cut to support the economy amid weaker growth prospects.

Meanwhile, 2TradeAsia.com said the market will continue to monitor developments in the United States as government operations remain halted amid lawmakers’ failure to pass a budget.

It placed the PSEi’s immediate support at 6,000 and secondary support at 5,800, while resistance is pegged at 6,200. — Alexandria Grace C. Magno