This week, local stock market investors will be taking cues from the US Federal Reserve meeting as well as Philippine fourth quarter gross domestic product (GDP) data.

“Investors face an eventful trading week that could determine whether the local index finally breaks out of the strong resistance at 6,700,” said China Bank Capital Corporation Managing Director Juan Paolo Colet.

He noted that, “amidst a slew of economic data and month-end trading, the market is likely to react mainly to the Philippines’ fourth quarter GDP growth print and, more crucially, the remarks of Federal Reserve Chair Jerome Powell after US central bankers conclude their policy meeting on Wednesday.”

“Any indication of a US rate cut as soon as March or May this year could fuel bullish bets and propel our market higher. Conversely, any erosion in the probability of an early dovish pivot in US monetary policy could lead to further market consolidation,” Colet explained.

Philstocks Financial Research Manager Japhet Tantiangco said, “investors may also continue to watch out for clues with respect to the outlook of our country’s inflation and interest rates.”

“With a rebound fueled mostly by the positive cues from Wall Street, the local market is now near the 6,700 resistance level again. However, trading has remained tepid implying that last week’s climb had weak conviction,” he said

Tantiangco noted that, “with last week’s close, the local market stands at a price-to-earnings ratio of 13.72 times, below its 2019 to 2023 PE ratio average of 18.15 times. This shows that there is still room for bargain hunting within the market."

However, he warned that “the current weakness seen in the local currency, if sustained, may weigh on the local bourse.”

While expecting trading to be volatile this week, 2Tradeasia.com said, “the PSEi's strong reaction after hitting 6,500, then retesting the 6,700 psychological resistance zone, shows technical promise. Follow through momentum in improving macro-fundamentals can only help give the index much needed escape velocity to possibly revisit that pocket within 6,700-7,000."

For stock picks, Abacus Securities Corporation is recommending SM Prime Holdings Inc. because its malls are doing well and will benefit from its REIT initial public offering, consistent demand will help boost its residential business, while its reclamation project is a bonus that the market has forgotten about.

On top of these, Abacus expects SM Prime’s earnings per share will grow by at least 10 percent this year, making the stock cheaper than it looks.

For COL Financial, the drop in AREIT’s share price presents an opportunity for investors looking for attractive yields to buy the stock at a discount.

Its share price dropped last Friday after its sponsor Ayala Land Inc. sold AREIT shares at a discount to market price to increase its public float and raise funds for its capital expenditures.