Weak stock trading ahead

The local stock market is seen to remain bearish this week as investors price in further increases in US interest rates in the coming year.

Last week, the main-share Philippine Stock Exchange index shed a total of 192.45 points or 2.7 percent to close on Friday at 6,850.71.

After hiking interest rates by 25 basis points as widely expected last week, the US Federal Reserve hinted of a faster pace of rate increases in 2017.

“Continue to see the market to range between 6,500–6,900 levels in the week ahead,” said BDO chief strategist Jonathan Ravelas.

Local stock brokerage AB Capital Securities said emerging markets were taking a hit from the US Fed’s hawkish guidance, coupled with expectations of increased fiscal spending in the US from President-elect Trump’s plan to revitalize domestic infrastructure. “Taking these two together, major capital outflows from emerging markets back to the US is highly expected in the coming months,” the brokerage said.

Meanwhile, AB Capital said political risk had intensified locally, adding that net foreign selling may be sustained.

“That said, local investors seem to be strongly supporting the market at this level, with the index consolidating between the 6,700-7,000 range, with bargain hunting at the strong 6,700 support level. With no major catalysts or economic events slated for the rest of the year, we can expect the market to continue consolidating at this range until year-end,” it said. —DORIS DUMLAO-ABADILLA