Local stocks are seen to pull back further this week as investors continue to pocket recent gains while bracing for the possibility of the US raising interest rates earlier than previously projected.
Last week, the Philippine Stock Exchange index (PSEi) lost a total of 56.41 points or 0.8 percent to close Friday trade at 6,851.38.
“The PSEi may likely continue to retrace in the coming week. Profit-taking actions are actually warranted given the index’s 13-percent rally in the last three weeks,” said Ron Acoba, chief investment strategist at trading research provider, Trading Edge Consultancy.
Acoba added risk-off sentiment could prevail following the hawkish tone of the US Federal Reserve (Fed), which dragged down the S&P 500 Index by 1.31 percent on Friday.
Based on the Fed’s latest dot plot, two 0.25-percentage rate hikes may be sanctioned as early as 2023 amid faster US economic growth and inflation.
“Nonetheless, we believe that index may eventually reach its 2021 peak of 7,300 to 7,400 as a broad number of index stocks are already gearing to swing from their respective bases,” Acoba said.
Jonathan Ravelas, chief strategist at BDO Unibank, said last week’s close at 6,851.38 implied that a near-term peak was in place at the week’s high of 7,001.21.
“Continue to expect the market to range between the 6,700 to 7,000 levels in the near-term,” Ravelas said. “However, a sustained fall below the 6,700 levels could signal the market could retry the 6,300 to 6,500 levels and reignite the bears to play.”