Philippine share prices will likely find their direction from events overseas, particularly the reaction of Wall Street to the US jobs data that will soon be released, dealers said.
The market may also be due for a correction after surging to near record highs earlier last week, they added.
For the week to Oct. 5, the composite index rose 203.01 points or by 5.7 percent to 3,775.91 points.
Average daily volume surged to 6.94 billion shares worth P6.7 billion from 4.2 billion shares worth P1.3 billion the previous week.
“The market will be looking for fresh leads. The catalyst for this week, I think, will come from the US jobs data and Wall Street’s reaction to the report,” said Jose Vistan of AB Capital Securities.
“The tone will be set by the bigger markets. Caution could prevail as investors will be watching the move of the US Federal Reserves when it meets at the end of the month,” said Conrado Bate of Citiseconline.
“The local equities market is vulnerable to a correction because of the recent hefty gains. Investors will be tempted further to take profits if there are no strong domestic leads,” he added.
“The market is due for a minor consolidation after strong rallies this week. However, I don’t see a major decline because we expect foreign buying to be steady,” said Jasper Jimenez of BDO Securities Corp.
“If the jobs data that everyone is waiting for is favorable, it will prevent a steep fall,” he added.
The market has been on the upswing for the past three weeks, more recently because of the Bangko Sentral ng Pilipinas’ decision to cut overnight rates by 25 basis points following the US Federal Reserve’s half-a-point reduction in its own Fed rate.
The prevailing low domestic inflation rate was also a key factor to BSP’s decision to slash interest rates.
The National Statistics Office reported last week that the annual inflation went up slightly to 2.7 percent in September from 2.4 percent in August. This, however, was still within the BSP’s estimated range of 2.1-2.8 percent.
AB Capital Securities said while there have been reported signs of improvement in credit markets ever since the Federal Reserve lowered their key interest rates, the markets are not yet out of the woods as problems involving asset-backed securities remain.
“We believe that the PSEi will respect the 3,800 resistance as we still need more reasons for the stock market to justify setting new all time highs. Sentiments now are quite optimistic against the backdrop of a weakening global economy. This makes us believe that the market is indeed vulnerable to a correction. We may have seen the worst but our outlook remains cautious going forward,” AB Capital Securities said. – With AFP
v