Shares to trade sideways ahead of Q3 reports

Shares to trade sideways ahead of Q3 reports

PHILIPPINE SHARES are expected to move sideways with a downward bias this week as US inflation data cemented bets of another aggressive rate hike from the US Federal Reserve next month and as focus shifts to companies’ third-quarter financial results.

The benchmark Philippine Stock Exchange index (PSEi) gained 9.11 points or 0.15% to close at 5,904.75 on Friday, while the broader all shares rose by 12.99 points or 0.41% to 3,177.74. 

Week on week, the PSEi declined by 27.44 points or 0.46% from its close of 5,932.19 on Oct. 7.

AP Securities, Inc. Equity Research Analyst Carlos Angelo O. Temporal said in a Viber message on Friday that the market posted a slight gain on Friday amid cautious trading.

“PSEi inched up thinly by 0.15% as the market erased most intraday gains. Investors remain cautious on probable changes in US sentiment amid the earnings season,” Mr. Temporal said.

“Trades for the week remained mostly directionless, as the broader market continues to seek solid ground ahead of third-quarter earnings season,” online brokerage 2TradeAsia.com said in a report on Friday.

“Philippine shares managed to close with moderate gains despite the hotter-than-expected US September inflation reading,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message on Friday.

US consumer prices rose more than expected in September on higher rent and food costs, bolstering expectations that Fed policy makers will decide on a fourth straight 75-basis-point (bp) hike at their meeting next month.

The consumer price index (CPI) rose 0.4% last month after rising 0.1% in August.

In the 12 months to September, the CPI rose 8.2% from 8.3% in August, slowing for the third straight month.

The US central bank has raised rates by 300 bps since March.

2TradeAsia.com said the September US CPI “all but ensures another tightening move from the Fed in the upcoming November meeting, which shows a near 90% chance of a 75-basis-point hike.”

For this week, AP Securities’ Mr. Temporal said local stocks may trade with a downward bias, with the market taking its cue from sentiment in the United States.

AB Capital Securities, Inc. Vice-President Jovis L. Vistan said in a Viber message that the market is expected to trade sideways this week amid the release of corporate results.

“Attention will now shift from macro to third-quarter corporate earnings reports and outlook. Market direction will be directed by the result and possible revisions. Earnings are likely to be impacted by the rising cost of borrowing and the weaker local currency,” Mr. Vistan said. 

2TradeAsia.com put the PSEi’s support at 5,700 and resistance at 6,000-6,100, while AP Securities’ Mr. Temporal placed support at 5,700 and resistance at 6,000. — Ashley Erika O. Jose

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