Bearish market sentiment to continue this week

MANILA, Philippines – The bearish sentiment at the local stock market will likely continue as investors await the decision of the US Federal Reserve on Sept. 17.

It’s a wait and see stance, analysts said, noting however, that even if the US Fed decides to hold off rates this time, an increase in the policy rates is still looming in the near future.

“Bearish sentiment could drag on local equities as the Fed’s interest rate decision on the 17th draws closer, with inflation and the labor market showing steady stream of improvements.  Note however, that should data become inconclusive, the Fed may opt not to raise benchmark rate this month.  Regardless, it may very well be a matter of time before rates begin their liftoff,” said Jason Escartin, investment analyst at F. Yap Securities.

Concerns over China’s economy would also continue to sway markets this week, he said.

Despite the jitters, the benchmark Philippine Stock Exchange index (PSEi) is likely to stay afloat above the 7,000 level, at least for the week.

“We don’t see the PSEi dipping below 7,000 until after this coming week, with bargain-hunters ready to pounce on opportunities created by exiting foreigners.  Moves beyond 7,100 however, could still be short-lived, unless macro catalysts arise,” Escartin said.

Luis Limlingan, managing director at Regina Capital said the index needs to stay above 6,950.

“For this week, we need the index to stay above 6,950 in order to establish a bullish higher low base and have a better chance of breaking 7,110. Doing so will put prices in a short-term upswing and ultimately retest its breakdown point at 7,272. But take note that meeting these conditions will not reverse the index’s primary trend as hitting 7,272 will still be a lower high compared to July highs, therefore we expect a lot of selling pressure near this resistance. On the other hand, failure to hold 6,950 will trigger corrections back to 6,636 and put signals back in the bearish territory,” Limlingan said.

The Philippine Stock Exchange Inc., meanwhile, on Friday provided a report on its preliminary findings on the events that caused the PSE to impose a temporary halt in the trading of listed equities in the market on Aug. 24 and Aug. 25.

“The trading halt on Aug. 24 was imposed at 2:05 pm after the PSE front-end trading terminals were determined to be experiencing market data transmission issues. The immediate resolution made at that time, as recommended by the system provider, was to free up the load capacity in the servers,” the PSEI said.

On Aug.t 25, a trading halt was implemented at 10:02 am when the same trading terminals encountered similar data transmission problems. The PSE subsequently installed and configured additional physical servers and loaded market data into the new servers.