The local stock barometer is seen awaiting cues from the US Federal Reserve’s tapering of monetary stimulus this week after last week’s correction.
Tensions in Ukraine and China’s economic woes escalated profit-taking at the local bourse last week, bringing the Philippine Stock Exchange index (PSEi) lower by 90.59 points or 1.4 percent to close on Friday at 6,391.24.
“Chartwise, the index encountered resistance at the 6,500 mark as investors took profit. It did warrant a pullback given the market’s overbought levels,” said Banco de Oro Unibank chief strategist Jonathan Ravelas.
“However, as the short-term uptrend channel remains intact and as the 6,300 level was not breached, the bias is for the index to test the 6,500-6,700 levels in the near-term,” he said.
AB Capital Securities analyst Abbygayle Estrella said it would be difficult to defy the looming foreign data scheduled for the coming week.
After the much-followed consumer and producer price indices, she said markets would brace for the minutes of the second Federal Open Market Committee (FOMC) meeting for
the year and Federal Reserve Chair Janet Yellen’s conference on the current status of the US economy.
“A new tranche of tapering could temper market sentiment given that the recent jobless claims reveal a more favorable labor landscape,” she said.
Other important US data to watch include housing starts and existing home sales as well as the correlation between industrial production and the Philadelphia Fed Survey on the manufacturing sector.
“Japan will also release its export and import data, which could be a concern as it comes on the heels of China’s depressing exports. Markets will also begin the week by digesting Crimea’s chosen future, which it is set to vote on March 16. For better or worse, the outcome could dictate the market pitch for the week,” she said.
On its third day of decline on Friday, she said the main index was now on correction mode since its steep ascent last February.
“Although we expect the main index to trek lower on weak indicators, we think that this is a healthy correction since it has kept its four-month long uptrend,” she said, adding that the ongoing technical correction, along with the dampened sentiment on fundamental factors, could send the main index back to 6,250. Doris C. Dumlao