Stocks are expected to move sideways with a downward bias this week, as the heightened US trade war against China, the European Union and Canada continues to weigh down on investors sentiments.
Domestic concerns over the sluggish peso and rising inflation rate are also contributing to the market’s weakness, according to analysts.
BDO Unibank Inc. chief investment strategist Jonathan Ravelas said while bargain hunting could possibly take place this week, a break below the 7,000-point mark for the Philippine Stock Exchange index could signal further test towards the 6,500/6,800 levels.
The recent move by the Bangko Sentral ng Pilipinas to raise interest rates by 25 basis points may not be enough to keep foreign funds in the local equities market, given that US Federal Reserve’s planned two to three rate hikes this year.
Analysts said the local equities market had not seen its bottom yet for the year and any rally could be short-lived as overseas investors continued to move their funds out of emerging markets including the Philippines.
The EU slapped revenge tariffs on iconic US products including bourbon, jeans and motorcycles in its opening salvo in a trade war with President Donald Trump.
Customs agents across Europe’s colossal market of 500 million people will now impose the duty, hiking prices on US-made products in supermarkets and across factory floors.
Trump wasted little time in responding, threatening on Twitter to impose 20 percent tariffs on European-made cars exported to the US, pressuring European automakers including Italy’s Fiat Chrysler and Germany’s Daimler.
“The underlying tensions between the US and China continue to escalate, and while neither wants a trade war, the US won’t accept the status quo, and China won’t change its industrial policy,” Rabobank senior strategist Michael Every told AFP.
The PSEi, the 30-company benchmark, entered the bear market territory last week, after falling 22 percent from the year’s peak of 9,058.62 on Jan. 29.
The bellwether, which fell to a low of 6,923.67, closed at 7,063.20 by the end of the week, while the broader all-share index sank 5.4 percent to 4,347.06.
All sub-indices ended in the red led by services (-8.21 percent), holding firms (-7 percent), financials (-5.68 percent), mining and oil (-4.75 percent), industrial (-4.5 percent) and property (-4.22 percent).
Foreign investors were net sellers by P6.6 billion last week, as daily turnover averaged P7.2 billion.
Top gainers last week were mostly third-liners including ISM Communications Corp. which climbed 26.2 percent to P2.36, IRC Properties Inc. which advanced 21 percent to P1.33 and Concepcion Industrial Corp. which rose 2.7 percent to P61.60.
Heavy losers included Bloomberry Resorts Corp. which declined 14.2 percent to P9.81, JG Summit Holdings Inc. which dropped 13 percent to P49.65 and PLDT Inc. which went down 12.6 percent to P1,133. With AFP