LOCAL SHARES are likely to trade sideways on Friday on tepid market activity as investors await the release of November US inflation data and next week’s Federal Reserve policy meeting, where they are expected to hike rates again.
The 30-member Philippine Stock Exchange Index (PSEi) slipped 149.22 points, or 2.23%, to close at 6,525.16 on Wednesday, while the broader all-shares index fell 51.86 points, or 1.49% and ended at 3,425.86.
Philippine financial markets closed Thursday on the feast of Mary’s Immaculate Conception.
The PSEi had closed lower on Monday on profit-taking before recovering on Tuesday. However, she declined again on Wednesday.
“The market closed Wednesday at 6,525 after a very bumpy start to the week before the holidays,” said Carlos Angelo O. Temporal, equity research analyst for AP Securities, Inc., in a Viber message.
He said positive news that fueled the market’s rally on Tuesday, including China’s easing of 2019 coronavirus disease (COVID-19) restrictions.
Beijing eased its zero-COVID policy last week, with rules that now allow infected people with mild symptoms to quarantine at home and drop tests for people traveling domestically.
Regina Capital Development Corp. Sales manager Luis A. Limlingan said the market’s downtrend in two of the last three trading sessions was caused by concerns about the Fed’s next move.
The Fed will conduct its final monetary policy review for the year on December 13-14, when markets expect a smaller rate hike after four consecutive hikes of 75 basis points (bps). It has increased borrowing costs by 375 basis points since March.
“However, there was obvious profit-taking on Wednesday in view of the bank holiday,” Mr Limlingan said.
Rizal Commercial Banking Corp. chief economist Michael L. Ricafort said the PSEi has revised down 3.8% for the month of December so far.
This is after a 10.2% rise in November, which was the largest monthly gain in more than 12 months or since September 2010.
“From the immediate low of 5,699.30 on Oct 3, PSEi is still up a total of 825.86 points, or 14.5%,” Mr. Ricafort said in a Viber message.
For Friday, Mr. Temporal said investors’ focus will shift to the US Consumer Price Index (CPI) data to be released on Dec. 12, which is expected to be a key consideration at the Fed’s upcoming meeting.
“The market’s upside could be hampered by these uncertainties, but continued peso appreciation is likely to keep it afloat,” he said.
“Friday local stock performance will depend on US Thursday night performance,” said Mr. Limlingan.
Mr Temporal said he expected market activity to remain anemic on Friday and placed PSEi support at 6,400 and resistance at 6,700. — JID table