The benchmark index of the Philippine Stock Exchange is expected to stay above 7,000 points as the market attempts to test key resistance levels, analysts said over the weekend.
Utrade Inc., the online brokerage firm of Unicapial Services Inc., said the US Federal Reserve’s developing narrative of less hawkish interest rate outlooks amid cooling inflation is driving positivity in the financial market.
Investors said that with the Fed seen becoming less hawkish, the Bangko Sentral ng Pilipinas was also expected to move to a slower pace of interest rate hike in the coming months.
The Fed’s policy meeting will be on Jan. 30, while the Monetary Board, the policy-making body of the BSP, is set to meet on Feb 16.
The MB raised the benchmark interest rate by 50 basis points in December to a more than 14-year high of 5.5 percent to prevent the second-round effects of inflation and defend the peso against the strong US dollar.
Aside from the less hawkish stance, Utrade said the Philippine government’s positive outlook on the growth of the domestic economy was lifting investors’ confidence in the market.
The reopening of China is also expected to boost the recovery of the domestic economy in terms of tourism, manufacturing and exports.
“We expect the index to trade sideways, continuing to test the 7,000 key resistance levels,” Utrade said.
The bellwether PSE index closed at 7,056 on Friday, up 1.5 percent week-on-week. The net foreign buying of P3.87 billion last week supported the local market’s steady rise.
Most international markets rebounded on Friday after a rocky week dominated by uncertainty over whether the global economy will suffer recession this year as central bankers continue to address inflation.
Major indices in New York, which have been under pressure most of last week, enjoyed a buoyant session, led by tech shares following strong Netflix subscription figures.
The streaming giant reported lower quarterly profits, but Netflix shares surged 8.5 percent after subscriber figures topped analyst estimates, as hits such as “Wednesday” and “Harry & Meghan” drew in new viewers.
Analysts also cited comments from Federal Reserve Governor Christopher Waller endorsing a 25-basis point interest increase at the Fed’s next meeting, smaller than other recent hikes.
“After four or five days of down markets, investors probably feel that most of the bad news is already out and perhaps the selling was overdone,” said Jack Ablin of Cresset Capital.
All three major US indices rose, with the Nasdaq leading with a 2.7 percent jump.
The gains in New York followed earlier up sessions in Asia and Europe.
“Having seen such a strong start to the year, there was always the probability that we’d see a little bit of profit taking,” said market analyst Michael Hewson at CMC Markets.
“However, that doesn’t mean that the … optimism that has been the hallmark of this early year rebound is evaporating, and that we might start to see a sharp move lower.” With AFP