Philippine stocks are expected to move sideways this week as investors await the first US Federal Reserve meeting scheduled before the end of January.
Analysts said the price movements would largely depend on investors’ expectations about the Fed’s next policy action, given the recent inflation data and geopolitical tension in the Middle East.
“We remain skeptical, albeit welcoming of any surprise easing prior to third quarter. A gradual ramp-up in expectations is more desirable at the moment, in the face of medium-term volatility in energy prices and geopolitical tension in the Middle East and China,” online brokerage firm 2TradeAsia.com said.
Investors sentiment will also continue to be affected by softer economic data in China, the world’s second largest economy which grew 5.2 percent in 2023, the slowest in more than 30 years.
The 30-company Philippine Stock Exchange index (PSEi) dropped 139 points, or 2.1 percent, last week to close at 6,503 on profit-taking and concerns about inflation as global crude oil prices advanced amid the tension in the Middle East.
The market’s immediate support is seen this week between 6,400 and 6,510 levels, while the next resistance is at 6,600.
RIzal Commercial Banking Corp. chief economist Michael Ricafort said the PSEi also corrected lower after the more cautious/less dovish statements from some Fed officials.
Investors are also worried that the mostly stronger-than-expected US economic data would reduce the chances of Fed rate cuts.
Analysts said that as the market failed to retest the 6,700 level, the index would likely hover between 6,500 and 6,600 levels over the short term while investors await fresh leads.