Traders expected to stay on the sidelines this week

MANILA, Philippines -  Investors are expected to keep a close watch on first quarter earnings results this week which would likely keep trading activity muted.

Jonathan Ravelas, chief market strategist at Banco de Oro, said investors may stay on the sidelines this week ahead of the release of income reports.

He said the week’s close of the Philippine Stock Exchange index (PSEi) at 7,578.16 suggests that the market is likely to consolidate in the 7,500 to 7,600 levels in the near-term.

Last week, the PSEi fell 0.67 percent week-on-week to 7,578.16.

Outside corporate earnings reports, market investors also kept a close watch on geopolitical events.

Turnover slowed 12 percent to P5.2 billion on average last week, ,as losers outpaced winners, 104 to 86. Foreigners turned net sellers at P236 million, reversing prior week’s gains in which foreign investors recorded P219 million in net inflow.

Moving forward, investors would be checking Dutertenomics and the ASEAN meetings as they watch out for new market-moving leads.

“Market players will check details on Dutertenomics, especially on highlights of expanding the percentage share of infra spending to 5.7 percent of gross domestic product. Such will be balanced-out by financing options, in a way that will not over-crowd government’s expected fiscal deficit. Among specific interest will be on the private sector’s contribution, especially on equity sharing and financing,” according to online portal 2TradeAsia.com

The delicate mix in balancing fiscal and monetary policies without necessarily abandoning an accommodative stance will likewise be among topics in the coming weeks.

“Part of the picture covers US President Trump’s expected signing of an executive order that will cover a review of tax regulations that may have burdened US citizens. Given the latest assurance planned US tax reforms will be made by the end of this year, regardless of whether the healthcare bill is passed, risk appetite could rise and validate possibilities for the Fed to tighten rates in sequel meetings. Also, the Bank of Japan and the European Central Bank (ECB) will have their meetings this week, with expectations of maintaining accommodative policies despite the ECB signaling its stimulus exit,” it said.

The upcoming ASEAN meetings in Manila this week are also seen providing directions on marketing trading activity.