Philippine stocks are expected to stay below the elusive 7,000 level this week, as investor sentiment turned negative on hawkish signals from the US Federal Reserve and the Bangko Sentral ng Pilipininas.
China Bank Capital managing director Juan Paolo Colet said the possibility of the local market breaching the 7,000 level would depend largely on the US February consumer price index print.
“How US equity markets react to the inflation report will influence the direction of the local stock index,” Colet said.
“If we see data that bolsters bullish bets of a Federal Reserve policy rate cut in June, then our market will likely benefit from risk-on sentiment and move higher this week,” he said.
Online brokerage firm 2TradeAsia.com also cited US February inflation rate as a major factor that could affect trading in the local equities market this week.
It said investors would also await the March 19 to 20 Fed meeting, which could inject volatility in the market.
The bellwether Philippine Stock Exchange index (PSEi) traded mostly in the red last week, but still managed to close higher by 0.33 percent to 6,942.21, as foreign investors continued to remain net buyers.
“The 7,000 has been so far elusive, with recent sessions characterized by long wicks signaling strong selling pressure up top,” 2TradeAsia.com said.
“This is a reminder that while rallies are not eternal, ultimately, long-term uptrends are produced, directed, and shaped by positive fundamentals and spreads between intrinsic value and price,” it said.
Analysts expect the market support at 6,800 and resistance at 7,000.