Market seen to rebound

THE LOCAL stock barometer is seen to rebound this week after taking a heavy beating in the first trading week of 2016 amid global jitters on China.

Last week, the Philippine Stock Exchange index fell by a total of 376.65 points or 5.42 percent to close at 6,575.43, a gloomy curtain-raiser for what most investors expect to be a very challenging year ahead.

Following the freefall triggered by concerns on China’s foreign exchange and stock markets, local stock brokerage AB Capital Securities said technical indicators were showing a bullish outlook for this week.

If the index ends on a high note today, it will confirm a bullish pattern that started on Friday. “This bullish reversal pattern may indicate that the near-term bottom may now be over,” AB Capital Securities said.

There were also other technical indicators implying that a rebound was imminent, the brokerage said.

“Initial and secondary index support levels can be found at 6,300 and 6,000, while initial and secondary resistance levels can be found at 6,600 and 6,800, respectively,” it said.

For this week, investors are seen to digest Friday’s release of the US nonfarm payroll data, which showed job gains that surpassed expectations. Non-farm payrolls increased by 292,000 in December, higher than the consensus estimate of a 200,000 increase.

“Expect the stock market to range between 6,500 and 6,800 levels in the near term,” said Jonathan Ravelas, chief strategist at Banco de Oro Unibank. “A break below 6,500 could call for further losses to 6,400.”

While things are looking better in the US, China remained a major source of volatility.

“China is shaking up markets again. August 2015 may provide a good template, but this time, the CNY (Chinese yuan) weakness may last longer,” Citigroup said in a research note.

In August last year, a surprise devaluation by China largely caused a global stock market meltdown. Doris Dumlao-Abadilla