Market likely to trade sideways

Share prices will likely revert to sideways trading with a downward bias as investor optimism was spooked by the possible belt tightening of the US Federal Reserve by 2023.

Local interest rates will likely be maintained over the near term period but analysts said investors will still be monitoring the upcoming Monetary Board policy meeting on Thursday.

“Brace for volatility, especially in banks and highly leverages shares, should the Bangko Sentral ng Pilipinas telegraph similarly hawkish messages though at current circumstances, (it) is unlikely,” online brokerage firm 2TradeAsia.com said.

While market sentiments have turned sour, analysts said the overall domestic trends remain positive as the government continues to ramp up its vaccination program.

Analysts are expecting the overall business to recover by the second half of the year with the arrival of more vaccines next month.

Metro Manila has remained on general community quarantine with restrictions. The government is tolerating a slight relaxation and allowing more businesses to operate with increased overall mobility.

The bellwether Philippine Stock Exchange Index declined 0.8 percent to 6,851.3 on profit-taking after  global  markets weighed the US  Federal  Reserve’s possible tightening earlier than anticipated.

Sectoral indices ended mixed with financials, services and industrial posting week-on-week gains, while property, mining and oil and holding firms registered week-on-week declines.

Foreign investors were net sellers for the week by P6.7 billion, while the average daily value traded rose to P9.8 billion from the previous week’s average of P6 billion.

Weekly top price gainers were First Philippine Holdings Corp. which rose 12.7 percent to P77.50; AC Energy Corp., which jumped 8 percent to P8.50; and MacroAsia Corp., which climbed 6.6 percent to P5.97.

Weekly top losers were Altas Consolidated Mining and Development Corp., which declined 10.8 percent to P6.58; Ayala Land Inc., which fell 6 percent to P36; and Philex Mining Corp., which slipped  5.3 percent to P6.72.

Meanwhile, the Dow capped the worst week since October with more losses Friday as markets continued to digest the latest pivot in Federal Reserve messaging towards more restrictive monetary policy.

After European bourses fell nearly two percent, the Dow dropped more than 500 points, or 1.6 percent on weakness in energy and financial shares. That brought the blue-chip index’s losses for the week to 3.4 percent, the biggest drop in eight months.

“It is turning into a bit of a black Friday for risk assets in what looks like a mini taper tantrum,” said market analyst Fawad Razaqzada at ThinkMarkets.

The reference is to a 2013 panic on markets after the Fed indicated it would begin to slowly reduce stimulus measures for the economy.   

Analysts said the losses were likely exacerbated by Friday’s expiration of key options and futures contracts.  With AFP