Philippine Market Outlook April 4, 2019
MARKET OUTLOOK
Shares firmed up on Tuesday along with international markets on the back of strong manufacturing data from the United States and China.
The market is benefiting from upbeat data that came out from China and the US yesterday. Manufacturing data from the world’s two largest economies were stronger than expected, tempering fears that we are entering a global slowdown in growth.
China’s Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) expanded at the strongest pace in eight months in March, rising to 50.8 from 49.9 in February, above the neutral 50-mark dividing expansion from contraction on a monthly basis and the highest level seen since July 2018. Meanwhile, the US Institute for Supply Management said its index of national factory activity rose to 55.3 from 54.2 in February, which had marked the lowest level since November 2016.
The market’s performance was attributed to China’s manufacturing data, in addition to optimism from foreign investors.
Market players maintain a constructive view on local equities in the short to medium term. Investors are advised investors to buy on dips.
Meanwhile, Wall Street took a breather from Monday's strong quarterly kickoff, and economic data did little to ease growth concerns.
Data showing that new orders for key US-made capital goods slipped in February and that shipments were flat did little to lift tepid investor sentiment.
Orders for non-defense capital goods excluding aircraft, or core capital goods orders, a closely watched proxy for business spending plans, fell 0.1%.
The data comes on the heels of a survey showing a surprise rebound in China's manufacturing activity and better-than-expected US numbers.
With Q1 corporate earnings reporting season about two weeks away, investors are bracing for what may be the first US profit decline since 2016. Analysts expect quarterly earnings to fall 2%.
There are reassuring signs that the global economy isn't tumbling into a recession, but it's not sufficient to have economic growth. Earnings growth is also needed.
