Philippine shares are expected to continue its sideways trading as investors are on a wait and see due to continued concerns regarding more rate hikes.
China Bank Capital Corp. managing director Juan Paolo Colet said the market’s movement this week will dictate investors’ reaction to the US June inflation data
“Many traders remain on the edge about the increasingly hawkish policy stance of the Federal Reserve and this week’s inflation print could affect the outlook for further US rate hikes,” Colet said.
“This might also affect Bangko Sentral ng Pilipinas’ view on the appropriate timing of any domestic rate cut,” he said.
Philstocks Financial Inc. research manager Japhet Tantiangco also said worries over a possible resumption of the Federal Reserve’s monetary tightening still weigh on investors’ sentiment, as further rate hikes by the Fed puts downside risks on the US and the global economy.
Investors are also waiting for catalysts that could strengthen market confidence.
“As they wait, trading participation could remain tepid,” Tantiangco said.
The local market is expected to test the validity of its breach of the 6,400 level this week.
If the market is able to get back above 6,400, Tantiangco said the index is expected to continue with its sideways trading within the 6,400 – 6,600 range.
However, Tantiangco said the the market could move with a bearish bias with a new support at the 6,000 – 6,100 range if the index fails to go back to 6,400 level.
Meanwhile, the market’s recent decline could also provide opportunities for bargain hunters to start accumulating stocks that are expected to deliver positive results over the medium-term.
Last week, the Philippine Stock Exchange Index fell 89 points or 1.38 percent week-on-week to close at 6,379.03 while the broader all shares index declined by 0.89 points to 3,422.28.
Average daily value traded further thinned out at P3.1 billion from previous week’s average of P4.9 billion. Foreign investors were net sellers by P410 million.