Stock prices likely to track Fed course

MANILA, Philippines -  The stock market is expected to continue its consolidation phase this week as it awaits positive catalysts both locally and abroad.

The Philippine Stock Exchange index (PSEi) closed last Friday with a slight gain compared to the previous session at 7,247.12.

Week-on-week, however, the benchmark index finished 12 notches, or 0.16 percent lower, with average value turnover regressing 11 percent to P5.3 billion.

Net foreign selling in equities widened to P494 million on average from P209 million.

Volatility is again expected this week as markets are seemingly pricing-in the possibility of the US Fed’s upward interest rate adjustment, according to market research portal 2TradeAsia.com.

“Overall, this could keep the investing mood at bay for now, until Fed actions are fully factored-in,” 2TradeAsia.com said.

“The PSEi’s short-term declining channel might suggest continued consolidation for now, unless fresh catalysts arise in the coming days,” it said.

At the macro level, share prices boost could come from fiscal stimulus measures abroad, one of which has been announced by US President Donald Trump’s support for increased infrastrucutre spending.

Locally, 2TradeAsia.com said market watchers would heed for President Duterte’s support for capital-intensive sectors, as well as his other economic roadmap that will help attract investments.

Release of corporate earnings results, meanwhile, are also expected to be on the radar of most investors.

“More importantly, fund managers will take a look on other ‘boon or bane’ variables for specific sectors, especially after proposals were floated on the need to have Smart conduct an IPO in conjunct with the extension of its legislative franchise. Within the power sector, investors would also weigh the effect of the proposed carbon tax law, excise and VAT charges on coal prices, vis-à-vis alternative energy sources,” 2TradeAsia.com said.

For this week, immediate support is seen at 7,150 to 7,200, while resistance is pegged at 7,300.