Stock Market Weekly: Bourse may trade downwards

WHAT HAPPENED LAST WEEK

The benchmark index was slightly up by 0.56% week-on-week, closing at 6,936.09 (+38.55 points). The week started cautiously, absorbing the previous week’s MSCI rebalancing effects, with US markets closed for Labor Day on September 2. By midweek, the PSEi reflected international market negativity as the US experienced its largest drop since August 5, driven by concerns over its economy.

However, local gains were sustained due to better-than-expected Philippine inflation, which came in at 3.3% for August (below the 3.6% consensus). This, coupled with favorable employment data (July unemployment rate dropped to 4.7%), provided market support. Additionally, the Philippine peso strengthened against the US dollar, closing at PHP 56.37 from a year-to-date high of PHP 58.87 in June.

WHAT TO EXPECT THIS WEEK

Expect the Philippine Stock Exchange index (PSEi) to trend downward, driven by heightened recession concerns following weak US jobs data. US markets dropped significantly last Friday, with nonfarm payroll and jobless claims data fueling fears of a hard landing for the US economy. US wholesale prices (Producer Price Index or PPI) are expected to increase, adding further pressure. However, market declines may be limited due to expectations of lower US inflation, which could fall to 2.6% for August (from 2.9% in July). Local drivers such as declining oil prices may also provide slight relief.

Resistance: 7,000 / 7,100

Support: 6,700 / 6,800

ANALYSIS

The PSEi closed the week 0.56% higher, but the index faces downside risks with momentum indicators such as MACD and RSI signaling bearish trends. If bearish sentiment continues, the index may test the support at 6,700–6,800. Conversely, sustained buying could push the index to challenge resistance levels at 7,000–7,100.

STOCK CALLS FOR THE WEEK

Century Pacific, Inc. (CNPF) | TRAILING STOPS | FMSec Target Price: PHP 37.50,

CNPF broke out of a wide range and is continuing an uptrend. Key moving averages are trending upward, with bullish momentum signals. Trailing stops are recommended for investors with existing positions.

Universal Robina Corp. (URC) | BUY | Consensus Target Price: PHP 128.00

URC is down over 25% from its July peak and retesting support. It is trading below key averages and shows extremely oversold conditions. Accumulating URC at current levels is advisable. Set stop-limit orders at PHP 82.75 and take profits around PHP 100.

Jollibee Foods Corp. (JFC) | BUY ON PULLBACKS | FMSec Target Price: PHP 300.00

JFC broke out from an inverse head and shoulders pattern but is in overbought territory. A short-term consolidation may offer buying opportunities. Accumulate JFC around PHP 245-PHP 250. Set a stop loss below 8% of average cost and take profits above 15%.

KEY DATA RELEASES

1. Philippine Imports and Exports y/y for July 2024 – Tuesday, September 10, 2024

2. US Consumer Price Index (CPI) y/y for August 2024 – Wednesday, September 11, 2024 (previous: 2.9%; estimates: 2.6%)

3. US PPI y/y for August 2024 – Thursday, September 12, 2024 (previous: 2.2%)

4. US Imports and Exports y/y for August 2024 – Friday, September 13, 2024