All eyes on US-China trade spat

The stock market is expected to trade sideways with a downward bias this week as investors worry about the impact of a pro-Hong Kong legislation on US-China trade negotiations that President Donald Trump signed into law.

Analysts said the cloudy outlook on the US-China trade talks amid the Hong Kong issue would continue affect investor sentiments in December.

Trump on Thursday signed into law a controversial bill backing Hong Kong protestors.

“The move can potentially add strain to the US current’s trade relationship with China,” said Regina Capital Development Corp. head of sales Luis Limlingan.

“In relation to this, gold prices advanced as investors sough relief after the US president signed a controversial bill backing Hong Kong into law, putting doubts on the former’s trade deal with China,” he added.

BDO Unibank Inc chief investment strategist Jonathan Ravelas said the previous week’s close of the Philippine Stock Exchange Index highlighted the acceleration of the downward momentum.

“A break below 7,700 opens the gate for a test of the year’s low at 7,514.05 levels, which could occur in the near-term. Brace for impact,” Ravelas said.

The PSEi last week dropped 1.1 percent to close at 7,738.96 on continued foreign selling. The boarder All Shares Index also declined 1 percent to end the week at 4,632.84.

Except for the property index which advanced 0.3 percent, all other sub-indices ended in the red led by financial which dropped 1.7 percent, holding firms which lost 1.6 percent and mining and oil which fell 1.5 percent. The industrial sector dipped 1.3 percent while services decreased 0.2 percent.

The PSEi is still up 3.7 percent year-to-date.

Foreign investors were net sellers by P8 billion. Foreign investors are now net sellers by P5.6 billion in the first 11 months of the year.

Weekly top price gainers include Semirara Mining and Power Corp., which rose 5.1 percent to P21.80; First Gen Corp., which climbed 5 percent to P25; and Ayala Land Inc., which advanced 2.2 percent to P45.50.

Weekly top price losers were Suntrust Home Developers Inc., which fell 13.6 percent to P1.33; LT Group Inc., which declined 12.4 percent to P11.06; and Philippine National Bank which dropped 7.6 percent to P37.50.

Wall Street stocks, meanwhile, pulled back from records Friday in a quiet, holiday-shortened session as the festive shopping season kicked off with a deluge of “Black Friday” promotions.

Walmart rose slightly, but  most other leading retailers fell, including Target and Amazon, as consumers shift ever more of their dollars to e-commerce from traditional stores.

Analysts said stocks were dragged lower by increased US-China trade friction as Beijing threatened unspecified retaliation after President Donald Trump signed into law legislation supporting Hong Kong pro-democracy protesters.

The market feels  “a little angst” on US-China trade relations, although the modest drop suggests few fears a preliminary US-China trade deal will fall apart, said Briefing.com analyst Patrick O’Hare, who added that low trading volume sharpened the decline.

The Dow Jones Industrial Average ended down 0.4 percent at 28,051.69. With AFP