Share prices are expected to bounce back this week after last week’s dismal performance if talks over the United State’s debt limit is finalized this week.
US President Joe Biden and Republican legislators reached an agreement in principle to raise the US debt ceiling and thereby avoid catastrophic default, US media reported Saturday.
US Bureau of Treasury Secretary Janet Yellen said over the weekend June 5 is the new date when the US government could start to default on its debts if the ceiling is not raised.
“If the two camps of the US government strike a deal next week, then it is expected to spur positive sentiment which in turn may lead to a bounce back for the local bourse. If not, however, the local market may extend its decline,” Philstocks research manager Japhet Tantiangco said.
The bellwether Philippine Stock Exchange index fell 134 points last week to close at 6,530 amid concerns over the lack of a deal on the US debt ceiling negotiations.
“For now, we see the local bourse’s support at 6,400. Resistance is seen at 6,600,” Tantiangco said.
Analysts said as overseas developments would likely take much of investors attention this week, traders would likely stay on the sidelines until the negotiations on US debt ceiling is finalized.
Analysts are also expecting the seasonal window dressing to boost investor interest in the market towards the end of May.
Online brokerage firm 2TradeAsia.com said that while month-end window dressing could boost investor participation, the latest developments on US debt ceiling as well as rising crude prices would still dictate this week’s trading.
“Brave for potential knee-jerk reactions/extra volatility mid-week,” 2TradeAsia.com said.
Global stock markets advanced Friday on hopes of progress in negotiations to avert a calamitous US debt default and a continued rally in tech stocks over enthusiasm for firms involved in artificial intelligence.
On Wall Street, the broad-based S&P 500 rose 1.3 percent to 4,205.45, while the Dow Jones Industrial Average posted a more modest 1.0 percent gain to finish the week at 33,093.34.
“The market is rising on the hope that they probably will be announcing very soon that we avert the default,” Peter Cardillo from Spartan Capital Securities told AFP, referring to the negotiations between the White House and Republicans in Congress.
The Nasdaq soared to finish the day up 2.2 percent at 12,975.69, fueled by a continued rally in stocks like Nvidia which stand to benefit from the widespread adoption of AI tools.
European stocks closed with solid gains and most Asian markets finished the day higher. With AFP
