Last week, the PSEi inched higher by 0.74% to close at 7,002.26 (+51.75 pts), driven by positive sentiment amid improving macro data. This includes the Philippine Manufacturing Purchasing Managers’ Index (PMI) in Jun-21, which picked up to 50.8, from 49.9 in May-21. In addition, preliminary data from PSA showed employment rate improved to 92.3% in May- 21 (Apr-21: 91.3%).
This week, we expect the market to continue to trend sideways with an upward bias as data released by the Bangko Sentral ng Pilipinas (BSP) showed the country’s consumer sentiment continued to improve in 2Q21. The overall confidence index (CI) for the quarter increased to -30.9% (1Q21: -34.7%). Meanwhile, the CI for 3Q21 reverted to positive territory at 1.3% (1Q21 survey: -2.2%) while the CI for the next 12 months rose to 19.8% (1Q21 survey: 17.9%). In addition, investors await the inflation print to be released on Tuesday. Economists forecast inflation to have eased in June and an accommodative monetary policy to remain moving forward.
After two failed attempts, third time is the charm as the PSEi closes above 7,000 for the first time since Jan-21. For the ongoing uptrend to be sustained, it is key for the market to stay above 7,000 this week. The ADX (trading above 30) confirms the strength of the PSEI’s bullish trend.
Trend followers can further accumulate once the market stays above 7,000 this week. Set cut loss below 6,600.
SUPPORT: 6,750/ 7,000 RESISTANCE: 7,200/7,400