PH stocks likely to rebound on bargain hunting

Philippine shares are expected to climb this week on bargain hunting after dropping last week as investors await the release of US consumer inflation data and the Philippine second quarter gross domestic product (GDP) report.

The benchmark Philippine Stock Exchange index (PSEi) sank by 125.92 points or 1.91% to close at 6,450.84 on Friday, while the broader all shares index dropped by 51.88 points or 1.48% to 3,447.61.

Week on week, the PSEi declined by 174.42 points or 2.63% from its close of 6,625.26 on July 28.

“In last week’s trading, the local market gave up its ground above the 6,600 level as Fitch’s downgrade of the US’ long term credit rating pushed the US long-term yields higher and raised concerns over the US and consequently, the global economy. In the process, the local bourse also fell below its 50-day and 200-day exponential moving averages,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.

Fitch Ratings last week downgraded the US government’s top credit rating, from AAA to AA+, a move that drew an angry response from the White House and surprised investors, coming despite the resolution of the debt ceiling crisis two months ago, Reuters reported.

The rating agency first warned the US of the possible downgrade in May and maintained its position last June after the country’s debt ceiling crisis was resolved saying it intended to finalize the review in the third quarter of this year.

For this week, China Bank Capital Corp. Managing Director Juan Paolo E. Colet said the local bourse may see volatile trading after the PSEi posted its largest weekly loss since September 2022.

“The steep selloff last Friday, induced mainly by institutional trades for the PSEi rebalancing, could prompt an index rebound on Monday. Activity for the rest of the week will be driven by Philippine second quarter GDP and US July inflation prints, corporate earnings reports, and the MSCI index review announcement,” Mr. Colet said in a Viber message.

Second-quarter Philippine GDP data and the July US consumer price index report will be released on Thursday.

Philstock’s Mr. Tantingco likewise said that the market will be mainly driven by investors hunting for bargains after the sell-off last week.

“However, any advancement would be challenging as headwinds weigh on sentiment. Aside from the renewed worries over the US economy, upside inflationary risks are also building up for the Philippines which may cause worries over our near-term inflation outlook,” Mr. Tantiangco added.

Mr. Colet placed the PSEi’s major resistance at 6,700-6,750 and support at 6,370-6,400, while Mr. Tantiangco placed support and resistance at 6,400 and 6,600, respectively. — A.H. Halili with Reuters