Market uptrend seen to continue on Q1 results

The stock market is expected to remain on the uptrend following a technical rally that started last week buoyed by positive first quarter earnings results of listed companies.

For the week to May 9, the main composite index rose  56.47 points or 2.07 percent week-on-week to 2,779.42 as investors looked for bargain stocks.  Average daily turnover increased to 1.502 billion shares valued at P4.34 billion compared with 1.069 billion shares valued at P2.17 billion a week earlier.

“We believe that we have entered into a window of opportunity for both short term traders and long term bargain hunters.   Stocks have been going down since the first week of April, losing 11 percent  off the highs as investors have started to bet that inflation will start to spike up. The concern is valid and should continue to depress stocks in the medium term.  Notwithstanding, we believe that stocks might rally a bit in the very short term.  We have a potential short term bottom but the longer term picture obviously is something that will remain to be seen,”  said Jovis Vistan of AB Capital Securities.

Vistan said concerns about the impact of high prices may die down as inflation is expected to go slow down. 

Inflation in April surged to a new three-year high of 8.3 percent which is significantly higher than the previous month’s 6.4 percent, mainly driven by a surge in food prices.

He said investors are expected to focus more on the corporate financials, the country’s economy and on whether the Bangko Sentral ng Pilipinas (BSP) would raise interest rates.

Rising crude oil prices may weigh on market sentiment after crude started trading above $120 per barrel. 

“Oil prices have doubled over the past year,  causing gasoline prices to surge further and strap down consumers.  We have been seeing weekly increases in gasoline prices from between P0.50 and P1 per liter.  World crude oil prices are now being projected to rise to $200 per barrel as global oil demand continues to rise while supply fails to catch up,” Vistan said.