The Philippine Stock Exchange Index is expected to drop below the 7,000-point level over the near term period as overall sentiments remain negative due to inflation concerns.
“With an inflation figure that fell below expectations still failing to resuscitate the PSEi and halt the outflow of foreign funds, we should remain vigilant next week if the overall negative sentiment continues. Next support for the PSEi is now at its previous 2018 low of 6,923.67,” Papa Securities trader Gio Perez said.
BDO Unibank Inc. chief investment strategist Jonathan Ravelas said investors were concerned about rising inflation rate as well the continued weakening of the peso and rising oil prices.
“Chartwise, the week’s close at 7,078.20 highlights the market’s continued march towards the 6,900/7,000 levels in the near-term. Any pullback (if any), could just be limited to 7,200/7,300 levels. The next key support after 6,900 levels is seen at 6,500 levels. Brace for impact,” he said.
While the economic officials hinted the 6.7-percent inflation rate in September was already the peak and there were clear signs prices would taper off by the end of the year, analysts said investors would still be on a wait-and-see mode to make sure inflation started to ease.
The PSEi dropped 2.7 percent to close at 7,078.20, the fifth straight week of decline, while the broader All Shares Index slipped lost 2.3 percent to 4,363.36 on foreign selling.
Except for the services index, which inched up 0.6 percent, all other counters ended in the red led by property (-3.67), mining and oil (-3.56 percent), holding firms (-2.91 percent), financials (-2.81 percent) and industrial (-2.28 percent).
Foreign investors were net sellers by P2.66 billion while the average daily value traded stood at P4.75 billion.
Weekly top gainers were PAL Holdings Inc., which rose 7.3 percent to P8.85; Wilcon Depot Inc., which climbed 5.2 percent to P10.84; and Manila Electric Co., which gained 4.7 percent to P356.
Weekly top price losers were JG Summit Holdings Inc., which fell 8.9 percent to P49.05; Universal Robina Corp., which declined 7.6 percent to P133.50; and GT Capital Holdings Inc., which dropped 6.8 percent to P764.
US and European stocks, meanwhile, tumbled Friday on worries about higher borrowing costs spurred by this week’s sudden jump in US Treasury bond yields.
Markets remained focused on yields of the 10-year US Treasury, which rose for the third straight day, this time to 3.225 percent.
Analysts said the sudden surge in interest rates had deepened worries about higher inflation and an uptick in costs for loans and mortgages.
Art Hogan, chief market strategist at B. Riley FBR, said the jump this week in yields had been “breakneck” and could be “disruptive” to stocks.
“The bond market has sold off all week and interest rates have been pushing higher, because traders are worried the Fed is going to have to be more aggressive in its rate hikes,” said FTN Financial’s Chris Low. “That tightening fear is finally starting to spill over into stocks.”
Among major US indices, the Nasdaq fell the most at 1.2 percent.
Earlier, London, Paris and Frankfurt all lost at least one percent. With AFP
