Philippine Market Outlook July 16, 2018
MARKET OUTLOOK
Share prices are seen to move within a narrow range in the week ahead, with many banking on an increase in trading volume for the main index to sustain its upward trajectory.
The month of July is looking brighter and brighter as the index had another good week. Two scenarios are being looked at this week. The first is that volume starts to come in, and the index is going to try and test the next resistance at 7,500.
Reaching the 7,500 resistance will confirm the PSEi’s reversal, as well as put an end to the bear market.
The second scenario is that investors will take gains as several blue chips have gained 10% in the last two weeks and the index is seen to come back down to support at 7,185. Based on the market sentiment, the latter scenario is more likely to take place. However, the pullback that may be seen this week is a great opportunity for more investors to test the waters.
Meanwhile, investors will focus on developments in the escalating trade war between the United States and China. US President Donald J. Trump last week announced additional dues on $200-bil worth of Chinese goods. China has yet to retaliate from this fresh round of tariffs.
Resolutions that would put clearer guidelines in resolving the US-China trade row will be a boost for equities, having regressed from its recent high this year. This issue is something that investors will have to deal with on a daily basis, pending clearer outcomes of talks.
Earnings results for H1 are soon to be released, and investors are advised to hunt for stocks with good fundamental merits and solid upside potential.
Support is expected to be at 7,340 down to 7,185, while resistance could reach 7,400 to 7,500.
