Stocks to test 6,700 level

MANILA, Philippines — A slew of economic data to be released this week would likely determine the stock market’s movement even as investors continue to grapple with concerns over the Delta variant and strict lockdown’s impact.

Last week, local equities took a breather, but buying might resume in the coming days as investors focus on improved sequential earnings results from index-based stocks, plus chances for higher capex rollout for the remainder this year, 2TradeAsia.com said

The 30-company Philippine Stock Exchange index or PSEi closed at 6,539.91, correcting week-on-week after declining for four straight weeks and gaining 4.3 percent or 269.68 points.

The PSEi has lost 8.4 percent since wrapping up at 7,139.71 in end-2020.

2TradeAsia said it sees immediate support of the index at 6,500, with resistance at 6,650 to 6,670,

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the next important support is at 6,450 levels.

“After that, next support levels would be at 6,080 to 6,100 levels versus further downward correction,” he said.

The next important resistance levels meanwhile are at 6,660 to 6,760 levels versus further upside potential in the near future. For the week, the PSEi reached an intra-day high of 6,605.46 on Aug 5.

Moving forward, Ricafort said the major upcoming local leads and catalysts include major economic data for the coming week such as agriculture output to be released on Aug. 9, gross domestic product to be reported on Aug. 10, and the Aug 12 policy-rate meeting of the Bangko Sentral ng Pilipinas.

Investors would also be looking at corporate earnings and new adjustments on quarantine qualifications.

Another catalyst for the market, Ricafort said, includes preparations for the May 9, 2022 presidential elections, including increased government spending, especially infrastructure as a major pillar to the economic recovery program to help pump-prime/stimulate the economy in view of the start of the election ban on some public works starting March 25, 2022 – less than eight months away.

2TradeAsia said some might be inclined to look past the two-week ECQ status to further control the Delta variant’s spread, and view accelerated vaccinations positively amid the global fight against covid-19.

“It is important to continue to trade within range and look for stocks with constant dividend payout,’ it also said.