Earnings, US Fed to influence market

Published October 27, 2019, 12:00 AM

by manilabulletin_admin

By James A. Loyola

The local stock market is seen to be swayed by earnings reports this week, as well as by news on US interest rates.

Traders work beneath an electronic ticker at the trading floor of the Philippine Stock Exchange in Bonifacio Global City (BGC).(Bloomberg file photo)
Traders work beneath an electronic ticker at the trading floor of the Philippine Stock Exchange in Bonifacio Global City (BGC).(Bloomberg file photo)

“There will be window dressing for the shortened week, investors will keep digesting more earning that come out, the FOMC (Federal Open Market Committee) will also have its meeting as well,” noted Regina Capital Development Corporation Managing Director Luis Limlingan.

He added that, “rumors as to which names made the grade for the MSCI rebalancing will shape specific names.”

However, Limlingan expects “the index will still meet heavy resistance close to 8,000.”

For his part, BDO Chief Market Strategist Jonathan Ravelas said the market will continue to consolidate within the 7,700 to 8,000 levels even as investors position ahead of third quarter results.

“Expect the bounce to stretch towards the 8,000 levels in the near term. Failure to try the 8,000 level could cause some profit taking and retest the 7,700 level,” he added.

Individual stock movements this week will hinge largely on coming third quarter earnings reports.

Among the early bids is Metrobank which merited a buy from COL Financial due to the 49 percent surge in its net income for the third quarter on the back of strong trading gains.

“We continue to like Metrobank as it is expected to be one of the major beneficiaries of the growing demand for loans given its size, and highly liquid and healthy balance sheet,” COL said.

For its part, Abacus Securities Corporation said “We believe most of the jump (in Metrobank’s net income) came from trading gains which jumped to P4.5 billion from P3.6 billion for the whole of the first half of 2019 so it remains to be seen if this will be sustainable. In any case, this should help the stock rally in the near term.”

Abacus is also keeping a watch on Metrobank’s parent company GT Capital, noting that its net asset value is well above the share price. However, the brokerage prefers to wait for the price to go lower before recommending a buy.

 
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