Stocks are expected to move sideways with an upward bias this week on the back of improving macroeconomic conditions.
Analysts said the market was expecting the Bangko Sentral ng Pilipinas to keep interest rates unchanged after the US Federal Reserve’s last week’s decision to pause interest rate increases amid the continued easing of inflation rate.
The BSP’s Monetary Board is scheduled to meet this week to discuss its next policy decision.
“Eyes will be on BSP’s next move on rates, which will likely just be on step with the Fed—status quo for now,” online trading firm 2TradeAsia.com said.
It said with the easing inflation and expectations of less aggressive round of rate hikes for the remainder of the year, overall fundamentals strengthened over the medium term.
“The case for rate reductions as early as next year is gaining traction, as we anticipate valuation upgrades toward the tailend of 2024 to capture the more forgiving aspects of 2024,” 2TradeAsia.com said.
Property and banking stocks are expected to benefit from improving inflation and interest rate environment. These stocks, analysts said, should get an increase in valuation over the medium term.
The bellwether Philippine Stock Exchange index hovered within a range of 6,400 and 6,500 last week, which could provide investors opportunity to accumulate on stocks and position for the long term.
“Given that the local market remains at attractive levels, we may still see bargain-hunting that can help the market extend its gains,” Philstocks Financial Inc. research manager Japhet Tantiangco said.
Tantiangco said investors would also be on the lookout for more catalysts pointing to a positive outlook for macroeconomic and corporate fundamentals.
The PSEi traded sideways last week despite an increase in foreign buying. The index closed flat last week as most counters ended in the red except for the property sector.
Foreign investors were net buyers by an average of P1.58 billion, as most stocks remained undervalued.
Meanwhile, world stock markets mostly rose Friday and currencies gyrated as investors digested diverging interest rate decisions by central banks on three continents this week.
In Europe, equities climbed with Frankfurt striking a new record after an upbeat session in Asia, which was lifted by hopes China will unveil fresh measures to kickstart growth.
Wall Street stocks rose at the start of trading but gave up those gains as European markets closed.
The broad-based S&P 500 finished at 4,409.59, down 0.4 percent for the day but up 2.6 percent for the week. Analysts said markets in New York were due for a pullback following a strong stretch.
“After a really strong week… it’s not unusual to see some mean reversion,” said Art Hogan, an analyst at B. Riley Financial. With AFP