Stocks are expected to trade within a wide range this week, as uncertainty in the global market continues, ahead of the Federal Reserve meeting.
BPI Asset Management said in its weekly outlook the bellwether Philippine Stock Exchange index would likely trade between 6,800 and 7,100 points this week.
F. Yap Securities investment analyst Jason Escartin said investors would carefully monitor developments overseas, as the Fed was scheduled to meet mid-week to consider another round of interest rate hikes amid rising inflation expectations driven by an improvement in the oil market.
“At Fed chief Yellen’s testimony before Congress this past February, she highlighted some key risks that could affect the central bank’s inflation outlook, thus signaling the FOMC won’t hike rates in the short term. This conservative stance has not changed, whittling down expectations from 3 to 4 hikes to 1 to 2, seen later in the year,” Escartin said.
Escartin said given the upcoming Fed meeting, the market would face a make-or-break situation this week, after hitting a high of 7,119.86 this year.
“Should the PSEi break out of its 200-day moving average, it could reverse the pessimism that took hold in August last year. However, it would be prudent for players not to be too giddy with optimism, as a golden cross is not imminent yet,” Escartin said.
The PSEi last week climbed 2.9 percent to close at 7,098.64 on Friday, while the broader all-share index gained 2.7 percent to 4,095.76, as investor sentiment was bolstered by the rise in Brent crude oil prices and significant stimulus released by the European Central Bank.
All major sub-indices ended in the green, led by financials which advanced 5.2 percent, followed by mining and oil which jumped 3.5 percent and property which climbed 3.3 percent.
Holding companies also rose 2.8 percent; industrials, 2.3 percent; and services, 1.3 percent.
Foreign investors were net buyers by P1.86 billion, at total foreign buying last week hit P19.84 billion while overseas selling amounted to P17.97 billion.
Top gainers last week were Italpinas Development Corp., which surged 22 percent to P3.11; Xurpas Inc., which jumped 18.1 percent to P18.10; and Melco Crown (Philippines) Resorts Corp., which gained 17.2 percent to P2.80.
Heavy losers were Manila Broadcasting Co., which fell 20.8 percent to P19; Keppel Philippines Properties Inc., which lost 16.1 percent to P3.74; and BDO Leasing and Finance Inc., which dipped 11.8 percent to P2.75.