The local stock market is seen to take more cues from second quarter corporate earnings’ reports as well as the July inflation due later in the week.
“Investors are expected to look forward to more second quarter corporate reports. Hopes that the upcoming second quarter corporate results would be strong may help in sustaining the market's position above the 6,600 support line,” said Philstocks Financial Research Manager Japhet Tantiangco said.
In line with this, 2Tradeasia.com said “some softness in consumer retail should offset strength in banking, power, and gaming, which further highlight the value of staying sector selective in the short or medium term.”
“Investors are also expected to look towards the country's upcoming July inflation data. A continued downtrend in inflation is seen to spur optimism which in turn could lift the market higher,” added Tantiangco.
2Tradeasia.com warned that “the presence of Typhoon Egay (and potentially Typhoon Falcon early August) may affect August and September inflation given damages in agriculture-heavy regions (Cagayan Valley, Cordilleras, Central Luzon).”
It noted that, “the 6,700 level is proving itself a tough psychological barrier to crack, with the index having peaked here last May. Inflation data and. more earnings momentum from big names could help drive more activity, but ultimately brace for some lethargy on the onset of the Ghost festival (Aug. 16 to Sept. 14).”
For stock picks, Abacus Securities Corporation is recommending Aboitiz Power as “its robust earnings performance for the first half is already way ahead of expectations and should thus warrant upgrades.”
“At its current price levels, the stock is still trading at 1 standard deviation below its historical mean. Moreover, although energy demand might have softened in the past weeks due to the rainy season, we expect supply tightness in the grid to persist in the medium term and should thus keep spot prices relatively elevated,” it added.
On the other hand, COL Financial has a BUY rating for Puregold Price Club despite its lower second quarter earnings.
“We continue to like PGOLD as it remains well-positioned to capitalize on improving mobility trends despite near term inflationary headwinds. We also like PGOLD for its differentiated focus of middle to low-income class consumers through Puregold while it competes in the premium segment through S&R,” it noted.