MANILA - Philippine share prices are seen to continue their ascent to unchartered territory on the strength of the local economy, but the market's resiliency may be tested by last Friday's disappointing US jobs data.
"The local economy has been producing numbers in line with, if not better than, official targets making market watchers, stakeholders and analysts a seemingly conservative lot. Such numbers have provided a buffer against a still uncertain global environment and growth prospects," said Jun Calaycay of Accord Capital Equities Corp.
Also boosting the appetite for the local equities market is the anticipation of better first half financial results from listed companies, BPI Trade said.
The Philippine Stock Exchange index was off to a strong start in July with a gain of 2.22 percent week on week highlighted by a new intraday high of 5,403.16 and an all-time high of 5,369.98 as the local market got a boost from Standard & Poor's credit rating upgrade on the Philippines to “BB+”, a notch below investment grade.
"As gauges move closer to 5,400, momentum appears geared for 5,500 to 5,700. Nevertheless, it would be prudent to anticipate price swings since ‘fiscal integration’ in Europe needs to go through a process," said Freya Natividad, investment analyst at 2TradeAsia.com.
After the central banks of China, England and Europe relaxed monetary policies last week, investors await the minutes of the latest Federal Reserve policy meeting, which will be released on Wednesday, to see what officials plan to boost the sluggish US economy.
This, after the Labor Department reported that the US created only 80,000 new jobs in June, below the expected 100,000, the latest sign that the world's biggest economy is in a soft patch. On Friday, the Dow Jones Industrial Average tumbled 124.20 points, or 0.96 percent, to 12,772.47.
"While all this [monetary easing] may be positive for the markets, when and how these stimuli and measures will translate to growth remain a concern," said Maria Arlysa Narciso of AB Capital Securities Inc.
After the release of the Fed's minutes, it will be the turn of Japan's central bank to assess the health of its economy. China will also report a stream of economic indicators, including its gross domestic product, helping the market size up the world's second biggest economy.
Following its run-up to unprecedented levels, Narciso said a correction may be possible this week given the high valuations and overbought levels for the market.
"The local outlook, although still rosy, will remain influenced by external weakness of major economies," she said.
source: interaksyon.com
