Local stocks are seen trading with caution this week as investors reassess recent gains alongside jitters likely arising from recent woes of geothermal firm Energy Development Corp. and the conflict in Sabah.
Last week, the main-share Philippine Stock Exchange index shed 0.35 percent to close at 6,642.27, marking the first weekly loss in nine weeks.
“Chart-wise, the market appears to be consolidating near the highs, ranging from 6,600 to as high as the 6,725.36 levels,” said Banco de Oro Unibank chief strategist Jonathan Ravelas. “Clearly, the market momentum is stalling and [indicates] that the market is indeed ripe for a much larger correction.”
Ravelas said a clear break below the 6,600 levels would put the 6,550-6,650 levels to a test.
Joseph Roxas, president of Eagle Equities, said the stock market might still continue to be weighed down by Lopez stocks.
Last Friday, index stocks Energy Development Corp. (EDC) and First Gen Corp. tumbled on news of the suspension of the Bacman geothermal plants due to a turbine disruption. Later in the afternoon after the market’s closing, there was a report that a landslide at EDC’s geothermal plant in Leyte killed five people while several others remained missing.
Freya May Natividad, an analyst at 2TradeAsia.com, said weak reactions in Western markets were seen this week, pending US regulators’ final call over the $85-billion across-the-board spending cut.—Doris C. Dumlao