Stocks market investors will be looking mainly towards the US Federal Open Market Committee meeting and corporate earnings reports for cues this week even as there remains more room for bargain-hunting amid improving trading data.
“The local market has already exhibited a golden cross as its 50-day exponential moving average crossed above its 200-day counterpart. This signals a possible rally in the medium to long term for the bourse,” said Philstocks Research Manager Japhet Tantiangco.
He added that, “The local market is seen to remain undervalued. Hence we may still see some bargain hunting next week. For the market to stage a strong rally however, catalysts are needed.”
“Investors are expected to watch out for the Federal Reserve’s policy meeting. In particular, investors are expected to watch out for clues regarding the Fed’s policy outlook.
“If the Fed gives a dovish outlook, this may spur optimism in the local market. Investors may also watch out for the upcoming S&P Global Philippines Manufacturing PMI for clues on the local economy,” Tantiangco said.
According to online brokerage brokerage 2TradeAsia.com, the FOMC's fifth policy meeting should pull focus, absent any geopolitical surprise in the headlines.
“Prices are already baking in a status quo move-but greater weighting will be placed on any supportive comments for a September rate cut,” it said noting that, “yields are pricing in about two rate cuts from the Fed (September and November or December).”
However, the brokerage said higher than expected US GDP for the second quarter and ramping elections season contribute to inflation and rate outlook volatility.
“The BSP is widely anticipated to mirror any moves from the Fed in this regard, although a potential upward kink in the inflation trend from weather related damages may be observed this month and extend to rest of the quarter,” it added.
Corporate earnings results from BDO Unibank, Manila Electric Company, Wilcon Depot, and will also be reported this week.
“Banks so far have continued to reaffirm our outlook for the year, with BPI posting strong year-to-date results and BDO and Metrobank expected to follow suit…
“While a strategy around income and quality is reiterated, some pivot towards growth may be rewarding in light of clearer path towards lower interest rates,” it added.
2TradeAsia.com pointed out that, “Momentum generated by an improving macro backdrop (inflation and growth) are likely to persist until data confirms otherwise, and positive earnings growth should help the PSEi brute force its strong resistance near the 7,000-mark.
“On that note, the upcoming ‘Ghost Month’ (officially beginning on the fourth of August) may increase friction in the short-term. Accumulate gradually,” it advised.
For stock picks, Abacus Securities Corporation said the recent first half report of Aboitiz Power Corporation supported its Buy recommendation for the stock as net income was “55 percent of full year 2024 consensus expectations meaning it is ahead of forecasts.”
“It is fair to say that results have been well ahead of expectations, justifying our buy recommendation on the stock,” it noted.
The stock brokerage is also rating Citicore Renewable Energy Corporation a Buy as it “appears to have found its footing. It's now up 10 percent since listing with decent volume.
“We reiterate that the company has a strong pipeline of projects that are shovel-ready or in advanced stages of development. These will support CREC's growth through at least the next 18-24 months.”