Stock market trading this week is expected remain on the sideways mode as investors stay on the sidelines because of geopolitical uncertainties and rising world oil prices.
The Philippine Stock Exchange Index managed to stay above the 7,600-point level, but BDO Unibank Inc. chief investment strategist Jonathan Ravelas cautioned it could still drop below 7,500.
He said geopolitical uncertainties and surging oil prices had worried consumers. He expects the immediate support and resistance at 7,500 and 8,000 levels, respectively.
Regina Capital Development Corp. managing director Luis Limlingan echoed Ravelas’ sentiment.
“We were not able to hold above 7,800 level but the good news is that 7,600 is still intact. The not so good news is that the PSEi is now manifesting a broadening formation which is a bearish pattern,” Limlingan said.
“Pivot points see initial support levels of 7,300 level followed by a support level of 7,110 which is a bear market support level,” he added.
Investors are also getting concerned about the sequel to the tax reform package of the Duterte administration that could affect direct investments. The government is pushing through with a plan to streamline fiscal incentives.
Share prices last week closed lower by 0.3 percent to 7,647.51, while the broader All Shares Index declined 0.2 percent to 4,654.67 amid continued foreign selling.
Among the sub-indices, the mining and oil services and financial posted week-on-week declines, while the property, holding firms and industrial sectors registered week-on-week gains.
Foreign investors were net sellers for the week by P2.4 billion, while the average traded daily value stood at P5.2 billion from the previous week’s average of P6.6 billion.
The weekly top gainers were Megawide Construction Corp., which rose 8.4 percent to P22.60; San Miguel Food and Beverage Inc., which climbed 6 percent to P68.90; and DMCI Holdings Inc., which advanced 5.7 percent to P10.78.
The weekly top price losers were Bloomberry Resorts Corp., which declined 7.6 percent to P11.80; East West Banking Corp., which fell 6.9 percent to P14.72; and Filinvest Land Inc., which dipped 5.4 percent to P1.57.
Global oil prices, meanwhile, fell Friday after top producer Saudi Arabia signaled a likely boost in supply as soon as the third quarter, and world stock markets were mixed over the sudden US move to cancel the summit with North Korea.
Saudi oil minister Khaled al-Faleh said at an economic conference in Russia that a gradual output increase could happen in the second half of the year to prevent any supply shocks, according to the RIA Novosti agency.
Benchmark crude prices tumbled almost $3 per barrel in London and fell more than $2 in New York. Oil stocks were likewise hammered as a result, with US supermajor Chevron falling 3.5 percent.
The weakened energy stocks weighed on Wall Street’s performance, with the Dow Jones Industrial Average and S&P 500 each lost 0.2 percent for the day.
Russia’s oil tsar Alexander Novak said ministers from Opec and other members of the production pact would discuss how much to increase production next month.