Investors are seen taking cues from more upcoming economic data and developments in the coronavirus disease (Covid-19) vaccine for the trading week, analysts said.
Philstocks Financial Inc. senior research analyst Japhet Tantiangco said a downward bias is still seen for the market on the back of recently released economic data and the main index being unable to sustain its ground at the 7,150 level.
“So far, our data are still conveying a challenged local economy as the recent typhoons aggravate our pandemic stricken situation,” Tantiangco explained.
He cited the labor force participation rate in October, which is down to 58.7 percent from 61.9 percent in July; the number of employed that declined by 3.6 percent; and the continued slow down of bank lending.
“Bank lending continues to slow down with October outstanding loans of universal and commercial banks net of reverse repurchase placements with the BSP (Bangko Sentral ng Pilipinas) growing year-on-year by 1.9 percent, slower than the prior month’s year-on-year growth of 2.6 percent and decreasing 0.4 percent on a month-on-month seasonally adjusted basis,” he said.
He also indicated the November inflation rate of 3.3 percent, which rose due to supply side pressures.
Tantiangco said investors would be looking for clues on the country’s economic condition through upcoming economic data, which includes September foreign direct investments and October foreign trade.
He added investors would also be monitoring developments in the Covid-19 vaccine as positive news from the candidates could spur optimism for this week’s trading.
Tantiangco sees the market’s initial support at 7,041.08, which is also its current 10-day exponential moving average, while next support is at the 6,600 level and resistance at 7,150.
Meanwhile, Regina Capital Development Corp. Managing Director Luis Limlingan said investors would assess the November inflation rate and whether the BSP would continue to cut rates aggressively moving forward.
Limlingan, likewise, noted that vaccine developments would drive the local bourse.
He added that the region would also be focusing on the stimulus deal abroad and the United States’ smooth transition from the current administration to the next.
Last week, the Philippine Stock Exchange index slumped by 0.83 percent or 59.57 points to close at 7,134.56 on Friday as investors took profits after the market’s three-day rally.
SOVEREIGNPH