THE Philippine Stock Exchange index (PSEi) is expected to trade between 6,850 and 7,150, with local export figures and further developments in the US being the main catalysts.
Bank of the Philippine Islands (BPI) Asset Management analysts said they expect the market to continue to be cautious and the sentiment-driven trading ahead of the US labor-data releases and the September Federal Open Market Committee meeting.
Week-on-week, the PSEi lost 47.03 points, or -0.66 percent, ending the week at 7,051.78. Foreigners were net sellers at P 2.23 billion or $104.15 million. Year-to-date, the net foreign funds are now at -$215 million.
Last week the index generally traded within a tight range, as investors positioned ahead of the inflation print and ahead of market-moving economic-data releases globally.
In August the consumer price index stood at 0.6 percent, which is the lowest level in two decades. Market reaction to the inflation figure was subdued, as investors were mostly on the sidelines ahead of the US nonfarm-payrolls report.
Regina Capital Development Corp. said the index needs to stay above 6,950, in order to establish a bullish higher low base and have a better chance of breaking 7,110.
Doing so will put prices in a short-term upswing and, ultimately, retest its breakdown point at 7,272—but meeting these conditions will not reverse the index’s primary trend, as hitting 7,272 will still be a lower high compared to July highs.
“We expect a lot of selling pressure near this resistance. On the other hand, failure to hold 6,950 will trigger corrections back to 61.8 percent Fibonacci [6,636] and put signals back in the bearish territory. A cautious position is still raised on issues trading above long-term averages and ‘sell on rallies’ on below these averages,” Regina Capital Head of Business Development Stock analyst Luis Limlingan said.
Meanwhile, BPI analysts expect the peso to trade range-bound with a downward bias, as investors continue to factor in the inflation print and as investors react to US non-farm-payroll print to be released over the weekend.