It is expected to drive further mitigation policies for Philippine stocks this week after economic growth and ease inflation lower in the first quarter.
Equity sentiment will also depend on the performance of the May 12 midterm elections, analysts said.
“Although the GDP (Gross Domestic Product) has not disappeared, the Philippine Stock Exchange Index (PSEI) has hit nearly 6,500 people, receiving resilient local returns and investor optimism,” said online brokerage 2tradeasia.com.
The leader's PSEI rose 1.07% or 68.71 points to 6,458.2 on Friday, while the broad all-share index rose 0.6% or 22.5 points to 2,762.85. In the week, the index rose 0.72% or 46.34 points.
On Monday, Filipinos selected a new group of members of Congress, 12 of the 24 Senate and thousands of local officials in the midterm elections were considered President Ferdinand R. Marcos, Jr.
Philstocks Financial, Inc. Senior research analyst Japhet Louis O. Tantiangco said in a Viber message that investors will monitor the results of the May 12 election.
“Investors are expected to pay attention to the results of midterm elections at home, as these will provide clues to future policies,” he said.
Mr Tantangco said the market would also be subject to hopes of further lowering local policy rates after lower inflation rates in April and weak economic growth last quarter.
“For the rest of the inflation and GDP data, people are still expected to support the local market for the rest of the year in Bangkok Sentral NG Pilipinas.”
Inflation slowed to 1.4% in April from 1.8% in March, while inflation fell from 1.8% in March to 3.8% as food and transportation prices fell.
Inflation last month was also the slowest inflation in five years.
The Philippines' economy grew by more than 5.4% in the first quarter, slower than 5.9% a year ago due to uncertainty over U.S. President Donald J. Trump.
“There are also expected to improve investors' development in trade negotiations with the United States and to take positive signs of progress,” Mr. Tantiangco said.
He added: “If the market can occupy the ground at a price of 6,400, it will be considered its new support and the next resistance level will be 6,600.”
Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., sets the secondary support for PSEI from 6,255 to 6,360 and the resistance is from 6,490 to 6,516.85.
2tradeasia.com estimates PSEI support to be 6,200, primary resistance to 6,500 and secondary resistance to 6,600.
“Despite the high growth, revenues so far, especially among consumer and bank names, have proven resilient, and as the election winds extend into the second quarter, the broader situation remains constructive for local risk assets,” it said.
“Once the political noise clears and improves fiscal visibility, momentum may take over after the election,” the broker said. “While the PSEI is trying to find escape speeds during the 6,500 period, it focuses on quality and second half follow-up.” – Revin Mikhael D. Ochave
