Market to look at Q3 earnings

MANILA, Philippines — Stock investors may turn their attention to corporate earnings results for the third quarter, the initial batch of which is expected to be released this week, for guidance on which direction the market may take moving forward.

In a report, Unicapital Securities said as the third quarter earnings season kicks off this week, it expects the support range to be resilient.

“Philippine equity has been trading at a steep discount relative to corporate earnings expectations and presenting solid opportunities for accumulation,” it said.

The main stock index closed at 5,983.56 last Friday, higher by 78.81 points or 1.3 percent week-on-week. This was a marked improvement after the previous week’s decline of 27.44 points or 0.5 percent.

Last week, the stock market took the cue from US stocks, which gained by roughly five percent week-on-week - the biggest weekly gain since June 2022.

US stock markets advanced sharply amid reports that some Federal Reserve officials are concerned about overtightening despite earlier hawkish signals from Fed officials, said Michael Ricafort, chief economist at Rizal Commercial Banking Corp.

He said the easing of global crude oil prices likewise buoyed market sentiment.

Oil prices eased to two-month lows recently and also near nine-month lows since Jan. 26, 2022 or before the Russia-Ukraine war started in February.

Ricafort said the PSEi also welcomed the growth in the dollar remittances from overseas Filipinos – or an increase of 4.4 percent in August to $3.02 billion.

Given the market’s behavior last week, 2TradeAsia sees immediate support at 5,800, with resistance at 6,000 to 6,100.

“Not all is doom and gloom, as not all assets are created equal. Earnings releases for sectors that we have underscored in our past notes are exceeding pro-forma, with growth divers mostly intact for 2023. These include banks and select industrials, but with upbeat expectations retained for wildcard plays in consumer discretionary and property,” it said.

To put it simply, 2TradeAsia said there are companies that continue to have good growth stories that investors may bet on.