LOCAL SHARES are expected to trade sideways in the next few days as investors anticipate key drivers to emerge during the third quarter, which has historically seen weak trading sessions.

As sessions turned within range during the four-day trading week, the Philippine Stock Exchange index moved within 7,734-7,894 while average turnover expanded 5% at P7.77 billion.  

The bourse closed the first semester of the year 29 points up to 7,843 or 0.37% week-on-week services recorded sluggishness  —  down 1.55%  —  which was offset by gains registered in holding firms, which went up 1.4%.

“Third quarter is traditionally a weak season for trading so there is the possibility of lightening up on the part of funds before they resume bargain hunting in the last quarter,” said Regina Capital Development Corp. Managing Director Luis A. Limlingan said in a mobile message over the weekend.

“Expect some consolidation for now, as the market builds its base to support stronger rises,” said online brokerage 2TradeAsia.com in its weekly outlook.

Regina Capital’s Mr. Limlingan said for this week investors will be anticipating the inflation report for June set to be released on Wednesday, wherein consensus falls at 2.7%, lower than the previous month’s 2.9% mainly due to the risks in crude prices and electricity rates.

Inflation likely eased in June on the back of lower oil and power rates, analysts said in a BusinessWorld poll, with some noting that the chances for the central bank to raise interest rates this year are “diminishing.”

A poll among 13 economists yielded a median forecast of 3% for the month, which if realized would be slower than May’s 3.1% reading but would still jump from the 1.9% rate seen in June 2016. It would likewise mark the second straight month when inflation declined since a 3.4% reading in April.

The figure also falls within the 2.4-3.2% forecast range given by outgoing Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco, Jr. late Friday, just before ending his 12-year run as central bank chief and handing the post over to his successor today.

Earlier, the BSP adjusted its inflation outlook for this year downward to 3.1% from 3.4% previously. The forecast may have prompted the peso’s weakness against the greenback during the week and reinforced expectations for another status quo on increasing interest rates as a result of mild inflation.

“Set against this backdrop, consumer-related shares might be highlighted, as some funds realign part of their holdings to stocks that would benefit from the last-quarter push,” Mr. Limlingan added.

2TradeAsia.com projects immediate support at the 7,800 level and resistance at 7,900-7,950.

“Internationally, the US will face a shortened week because of the July 4 holiday. Regardless, the market will pay attention to some important data such as crude oil inventories and jobless claims,” Mr. Limlingan added. — J.C. Lim

 

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