Market likely to trade sideways

Stocks are expected to trade sideways this week as investors brace for the release of inflation data, more corporates earnings and the results of the US presidential election.

Analysts said investor sentiment might be negatively affected by impact of the series of typhoons on the already fragile domestic economy.

Online brokerage firm 2TradeAsia.com said these factors could cause the market to pull back from its recent ascent to 6,400 level.

“Pullbacks after breakouts are common, often even designed, as these signal more sustainable ascents,” the online brokerage firm said.

Analysts said the third-quarter earnings results were decent so far, which confirmed expectations that the decline in earnings might have bottomed in the second quarter and were on the way to recovery in the third and fourth quarters.

The Philippine Stock Exchange index, the 30-company benchmark, fell by 2.47 percent week-on-week to settled at 6,324.00 on Oct. 30 on profit-taking after the government extended until the end of November the general community quarantine restrictions in Metro Manila.

“The week’s close at 6,324.00 appears to show some fatigue after touching the 6,500 levels. Expect the market to range within the 6,000/6,500 levels, respectively,” BDO Unibank Inc. chief investment strategist Jonathan Ravelas said.

All sectoral indices fell, pulled down by financials (-3.96 percent), property (-2.67 percent), and mining (2.29 percent).

Average daily turnover improved to P11.9 billion last week, mostly driven by the listing of Converge ICT Solutions Inc.

Foreign investors were net buyers last week by P390 million.  Top gainers last week were IMI which advanced by 8.05 percent to P6.44, Filinvest Development Corp. which climbed 2.1 percent to P9.70  and PXP Energy Corp. which went up by 8.4 percent to P12.10.

Heavy losers included Century Pacific Food Inc. which declined by 13.3 percent to P15.52, LT Group Inc. which dropped 11.6 percent to P11.54 and Puregold Price Club Inc. which retreated 2.9 percent to P41.25.

Meanwhile, Wall Street suffered its worst week and month since March on Oct. 31, with another losing session as markets gird for the US elections amid worries over rising coronavirus cases.

Major US equities indices were in the red the entire session as both Europe and the United States passed grim new milestones on Covid-19 and Belgium became the latest European country to tighten restrictions following announcements earlier in the week by France and Germany.

Although some US economic data has been stronger of late, including a record jump in third-quarter growth released Thursday, investors are concerned about new spikes in daily coronavirus cases that have begun to strain hospitals in some parts of the country.

The United States has seen a resurgence of its COVID-19 outbreak since mid-October, and has now charted more than nine million cases, according to a tally from Johns Hopkins University. 

The jump in cases has clouded the growth outlook amid fears of more US restrictions, said Briefing.com analyst Patrick O’Hare, who noted that many companies did not offer profit forecasts in earnings releases the last couple of weeks.

“These companies can’t really get their mind around demand to provide earnings forecast, so they’re not offering it,” he said.

O’Hare noted that markets have been in “de-risking” mode all week, in part because some polls have shown key states tightening in the US presidential contest, raising the odds of a contested election.

Further denting the outlook has been the failure of Congress to enact another round of US stimulus.

By one measure, the market’s latest pullback could mean trouble for US President Donald Trump. With AFP