Stock Market Weekly: CMEPA, tariffs, and US Fed guidance 

WHAT HAPPENED LAST WEEK

Last week, the index was marked by volatility, ending slightly lower, down 0.20%, closing at 6,395.57 (-12.7 points). The market opened July in the green with noticeably improved trading activity as investors welcomed the lower stock transaction tax under the Capital Market Efficiency Promotion Act (CMEPA), which took effect on July 1, 2025.

A day later, US President Donald Trump announced that a trade deal with Vietnam had been finalized, which included softer Vietnamese export tariffs at 20% (from 46%), transshipment tariffs of 40%, and zero US export tariffs. However, despite a cooler-than-expected June 2025 inflation print of 1.4% (estimates: 1.5%), the bourse faced heavy selling pressure as investors locked in gains last Friday.

The US labor market added 147k jobs in June 2025 – higher than the consensus estimate of 110k additions – with most of the job gains coming from government (+73k) and healthcare (+39k). The unemployment rate was stable at 4.1% (estimates: 4.3%; May 2025: 4.2%). The labor force participation rate came in at 62.3% (May 2025: 62.4%). Wage growth came in at 4.7% year-on-year (y/y) in May (April 2025: 4.6%).

WHAT WE CAN EXPECT THIS WEEK

This week, we expect the market to trade upwards. As earlier noted by US Treasury Secretary Scott Bessent, a sweeping tariff of 10% for more than 100 countries, is expected for the upcoming US tariff trade deadline by Thursday, 10 July. Nevertheless, favorable trade agreements between key trading partners and the Philippines could spur risk-on appetite and encourage trading activity.

On the same day, investors will also digest the US Federal Open Market Committee (FOMC) minutes, which will provide key insights into the state of the US economy and the direction of the policy rate. US Fed Chair Jerome Powell has indicated recently that the Fed is not discounting a rate cut this month should data come in better-than-expected. Locally, pump prices are set to decline for a second straight week with diesel, gasoline, and kerosene rolling back by PHP 0.40/PHP 0.60, PHP 1.20/1.60, and PHP 2.20, respectively.

ANALYSIS

The Philippine Stock Exchange index (PSEi) slipped 0.20% week-on-week (w/w) to 6,395.57 (-12.7 points.). The index is pulling back after its recent breakout above the 6,400 level and is now trading just below the recent key resistance, which suggests a period of indecision. A decisive move back above 6,400 could signal a bullish continuation, while sustained consolidation may lead to a retest of the 6,300 support. Investors are likely to watch for a clear breakout in either direction, with accumulation recommended only upon confirmation of upward momentum.

Resistance: 6,600

Support: 6,300

STOCK CALLS FOR THE WEEK

RL Commercial REIT, Inc. (RCR) | BUY ON SUPPORT | FMSEC TARGET PRICE: PHP 8.00

RCR has been in an uptrend, trading above its key moving averages (MAs) (20-day, 50-day, 100-day, and 200-day), which signals sustained bullish momentum. However, the stock recently hit resistance after reaching a new 52-week high of PHP 7.06. The RSI has moved out of oversold territory, suggesting that a short-term price correction is underway. We view this pullback as an opportunity to accumulate the stock at key support levels.

Accumulate RCR at support levels between PHP 6.75-7.00. Take profits at PHP 7.90 and set stop loss limits at PHP 6.32. For long-term investors, we have a fundamental target price of PHP 8.00 (+14.94% upside from the latest close).

Bloomberry Resorts Corp. (BLOOM) | TRAILING STOPS | CONSENSUS TARGET PRICE: PHP 7.31

BLOOM is currently trading above all key moving averages (MAs) (20-day, 50-day, 100-day, and 200-day), with the 20-day MA poised to cross above the 200-day MA. Further, the stock has bounced from support at its 200-day MA, with the RSI similarly pointing upwards, signaling the continuation of its uptrend. While overhang from index deletion expectations has mostly faded, we still take caution against potential selling pressure as portfolios are reallocated leading up to and on the rebalancing effectivity date.

For those with positions, implement trailing stops to secure gains and protect against potential selling pressure from index deletion.

Alliance Global Group, Inc. (AGI) | TRAILING STOPS | CONSENSUS TARGET PRICE: PHP 7.50

AGI surged by almost 70% from its 52-week low of PHP 5.76, breaking above key moving averages (50-day, 100-day, and 200-day). However, it is trading at extremely oversold levels with momentum indicators indicating potential weakness. The counter recently printed a bearish MACD crossover and an RSI bearish divergence, which could signal a deeper pullback. Thus, we advise implementing trailing stops to capture further upward movement while protecting gains.

Implementing trailing stops is advisable to prepare for anticipated weakness and secure gains.

KEY DATA RELEASES

1. PH Unemployment Rate for May 2025 on Tuesday, July 8, 2025 (previous: 4.1%)

2. PH Industrial Production for May 2025 on Tuesday, July 8, 2025 (previous: 4.3%)

3. US FOMC Minutes on Thursday, July 10, 2025

4. PH Foreign Direct Investment for April 2025 on Friday, July 11, 2025 (previous: USD 0.5 billion)