Share prices at the Philippine Stock Exchange are expected to consolidate within the 7,000 to 7,300-point level over the near-term period as investors weigh rising COVID 19 cases and the availability of vaccine in the country within the first half of the year.
Analysts said investors were concerned the entry of a more contagious coronavirus strain in the Philippines could lead to the imposition of stricter quarantine rules that could delay the recovery of the domestic economy.
The move of several sectors and local government units to secure vaccines for their constituents, however, is providing hope to investors.
Investors are also watching the trend on inflation rate, which rose to a 22-month high of 3.5 percent in December. The increase in inflation rate due to rising commodity and fuel prices could add pressure on the monetary policy.
“The index briefly breaking below 7,000 before bouncing back toward the multi-week resistance of 7,3000 on hefty turnover is a technical indication that momentum is skewed towards the belief that some semblance of ‘renaissance’ is still in the cards,” online brokerage firm 2TradeAsia.com said.
“In the interim, policy changes for February and March, as new strain headlines and need to fully reopen are balanced. Trade the range,” it added.
Analysts placed the immediate support level at 7,100 and the resistance at 7,500.
The PSE Index last week jumped 2.1 percent to 7,289.88 on bargain-hunting by investors after the it traded briefly below the 7,000 level at the start of the trading week.
All sectoral indices ended higher led by mining and oil (+4.84 percent), property (+3.29 percent) and financials (+2.74 percent).
The average daily value turnover rose 10 percent to P10.6 billion, but foreign investors remained net sellers for the week by P1.4 billion.
Meanwhile, global stock markets mostly rose Friday at the end of a strong week for equities, with Frankfurt and Wall Street continuing a record-breaking run as investors set their sights on a huge US stimulus package.
The dollar traded mixed as data showed the US economy shed 140,000 jobs in December―the first drop since April―in a sign the recovery from the pandemic’s damage has stalled.
“Today’s non-farm payrolls shouldn’t make too much difference to sentiment as investors are only really focused on the path forward with vaccines and stimulus,” noted Neil Wilson, chief analyst at Markets.com.
All three major US indices finished at all-time highs, with the Nasdaq up the most at one percent.
US stocks have rallied this week in spite of chaos in Washington after supporters of outgoing President Donald Trump stormed the nation’s Capitol building in an unsuccessful effort to block Joe Biden’s election victory from being confirmed.
Fallout from those events continued to preoccupy lawmakers in Congress as Democrats vow to impeach Trump, but markets have been looking ahead to Biden’s inauguration and expectations for more fiscal support.
Oil prices reached 10-month highs, continuing to benefit from news earlier in the week that Saudi Arabia plans to trim its crude output. With AFP