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Global sentiment will probably remain good today but with far less momentum as corporations in the US will start releasing their third quarter earnings data (which is seen to be generally weak) and also simply because of the fact that markets all over the world have gone up significantly already. Dow Jones only gained +0.08% while S&P 500 and NASDAQ shed -0.36% and -0.69% respectively. European markets though are up as well as its Asian peers.

US trade deficit increased to its highest in the last five months after its exports dropped while its imports from China increased. Data shows that deficit increased by 15.6% to $48.3 billion for the month of August. For the same month, exports to Mexico dropped by $1.5 billion while exports to the European Union slipped by $500 million.

Global demand is weak, which led to another reduced outlook by the International Monetary Fund (IMF). The slowdown in emerging markets led by weak commodity prices made the IMF reduce its growth outlook for this year to only 3.1%, 0.2% less from its outlook last July. IMF also reduced its outlook for next year at 3.6%, lower than its 3.8% projection as of last July. The IMF advised emerging markets to be ready in case the US Fed decides to tighten its monetary policies.

The PSE index gained +93.56 points yesterday (+1.34%) to close at 7,055.49 and inching closer towards its resistance level at around 7,100 (7,110 to be a little more exact). At this point, selling pressure is high between the 7,110 to 7,260 levels. Just keep a close eye on the index. Consider selling once price movement gets weak near or within the range.

PSEI (10-7-15)

Caveat Image

BY: MARCO VELASCO