Cautious trading expected

THE LOCAL stock market is seen to trade with caution this week as investors digest corporate earnings news flow alongside the increased probability of an increase in US interest rates within the year.

Last week, the Philippine Stock Exchange index declined by a total of 102.12 points or 1.41 percent to close at 7,134.26 on Friday.

Joseph Roxas, president of Eagle Equities Inc., said the market seemed poised for a downward correction this week.

Local stock brokerage AB Capital Securities said that as the index failed to breach above the 7,400 technical resistance level last week, the index was now set to test the support at 7,070 and 7,000 levels. It noted that other technical indicators remained “neutral-bearish.”

The initial and secondary resistance levels could be found at 7,200 and 7,400, respectively, the brokerage said.

As the third quarter earnings season started last week, AB Capital noted that banks— Banco de Oro Unibank, Security Banking Corp. and Union Bank of the Philippines—missed earnings estimates on weaker trading gains. It noted that Petron was the “bright spot,” posting a 58 percent year-on-year profit growth in the first nine months.

In a research note, Citigroup noted that during last week’s US Federal Open Market Committee had kept policy rates unchanged as expected. “However, the policy statement was more hawkish than market expectation. Fed lift-off expectations were quickly re-priced to about 46 percent from 35 percent earlier,” the bank said.

Because of this, Citi noted that the US Fed had injected volatility into emerging markets anew. Doris Dumlao-Abadilla