Market seen trading sideways

MANILA, Philippines - Sideways trading will likely continue this week amid the tug-of-war between strong support level and external geopolitical tensions.

Investors will be on the lookout for developments overseas ahead of the release of second quarter corporate earnings data, analysts said.

“The numbers themselves offer little leads-if at all the suggestion is that the movement will continue on its present sideways path,” said Justino Calaycay Jr., an analyst at Accord Capital Equities Corp.

AB Capital Securities Inc., analyst Joyce Anne Ramos said indications of strong corporate earnings will allow the main index to retest the 7,000 level “but may breach the support at 6,800 to revisit 6,700 should global sentiment continue to worsen.”

“For this week, we’ll see current issues unfold and should the situations worsen, they may create a drag on positive market performance,” said Gab Aguila of DA Market Securities.

The Philippine Stock Exchange index fell for the second straight week, dropping 0.7 percent or 48.02 points to 6,853.07 due to extended profit taking and investor cautiousness amid geopolitical tensions abroad.

The US imposed tougher sanctions on Russia for the latter’s annexation of Crimea while investors turned anxious over following reports that a Malaysian passenger jet was shot down by pro-Russian separatists in the Ukraine airspace.

Average value turnover declined  to P5.97 billion from P8.47 billion a week ago in the shortened trading week. On Wednesday, typhoon Glenda battered Metro Manila, disrupting the power supply and banking operations that resulted in the closure of financial markets.

For this week, Calaycay said the local stock market will depend on external leads as prices are holding on to current levels despite the general market slide.

“On the other hand, we have a host of external, and some degree of internal, geopolitical risks that may present some headwinds,” Calaycay said, adding that the traditional lean season in both hemispheres is approaching.

Financial advisers and fund managers usually take a vacation in August, which is also the traditional Chinese ghost month when investors refrain from making major investment decisions.

“While we await the domestic corporate earnings season, we advise investors hunt for bargain stocks, take cautious positions, and range trade,” Ramos said. Notable economic updates this week include the US new and existing home sales, inflation date and China’s manufacturing gauge, Ramos said.