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Tuesday, February 27, 2024

Market expected to trade sideways as investors wait for more clues

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Philippine stocks are expected to trade sideways this week, as investors wait for catalyst that could help sustain the market’s rally.

Philstocks Financial Inc. research head Japhet Tantiangco said in a weekly report the market’s run-up lacked conviction as year-to-date chart shows it was still on a downtrend while value turnover remained weak.

“Given such, investors are advised to remain careful,” Tantiangco said.

He said that while investors welcomed the slowdown in US October inflation rate and Bangko Sentral ng Pilipinas’ move to keep its rates unchanged, they were still waiting for more clues that would point to a better economic outlook.

He said, however, the market still looked cheap which could attract bargain hunters. The strengthening of the peso against the dollar and the drop in global oil prices could also boost market sentiments, he said.

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“Sustaining these positive developments may help the local market in next week’s trading,” he said.

The market’s immediate support is seen at 6,000 to 6,100 level, while resistance is 6,300 to 6,400 level for this week, he said.

The bellwether Philippine Stock Exchange Index closed 50 points, or 0.81 percent, higher last week on positive sentiments overseas.

Meanwhile, European and US stocks ended an upbeat week on a benign note Friday, pushing higher after cooling inflation reports raised hopes of an end to US interest rate hikes.

Major US indices shook off early losses, finishing higher on the session and with weekly gains for the third straight week.

“Every time the market tries to sell off a little bit, more buyers show up,” said Adam Sarhan of 50 Park Investments. “We are setting the stage for a strong end to the month and a strong end to the year.”

The broad-based S&P 500 ended at 4,514.02, up 0.1 percent for the day and 2.2 percent for the week.

Analysts described US investors as prone to a “fear of missing out” amid hopes a slowing US economy will avert a recession.

European markets were up in afternoon deals, with London leading gains as it closed more than one percent higher despite data showing an unexpected drop in retail sales in October.

Hong Kong closed down 2.1 percent, with shares in Chinese e-commerce titan Alibaba hammered after the company cancelled a spinoff of its cloud computing arm, citing the US-China chip war.

But crude prices rebounded after falling almost five percent on Thursday as investors look ahead to a meeting of the OPEC+ group of oil exporters.

Weaker-than-expected US inflation data this week fanned hopes that the Federal Reserve would not need to hike interest rates further.

UK inflation also slowed more than expected.

“There is increasing optimism amongst investors that interest rates are at a peak, and that inflation would continue to ease, considering energy prices are on the decline,” said Richard Flax, chief investment officer at Moneyfarm. With AFP

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