Amid bearish sentiment, bargain hunting could lift stocks

MANILA, Philippines — The stock market is expected to sustain its bearish sentiment this week, but potential bargain hunting may eventually lift shares out of the doldrums.

The benchmark Philippine Stock Exchange index (PSEi) came out swinging last week but stumbled for four straight days afterward to end the week in the red.

Following negative cues from the US markets and taking into account latest Philippine inflation data, the PSEi closed below the 6,800 level last Friday at 6,745.46, down by 2.29 percent week-on-week.

Japhet Tantiangco of PhilStocks Financial said it was the market’s worst weekly performance since Oct. 23 to 27, 2023 wherein it lost 2.95 percent.

In last week’s fall, Tantiangco said, the market also breached its 50-day exponential moving average as well as its minor support at the 6,800 level.

“Sentiment is turning bearish amid mounting upside risks to inflation, and tempered hopes on monetary easing by the Bangko Sentral ng Pilipinas and the US Federal Reserve,” he said.

With last week’s decline, Tantiangco said bargain hunting opportunities are seen this week.

“However, with the bearish factors at play, and the lack of a positive catalyst, we may not see a strong rally yet from the market,” he said, noting that a further decline for the bourse is still possible,” Tantiangco said.

With the PSEi breaking its two-month trading range in the 6,800 to 7,000 band, 2TradeAsia.com said this could lead to a sharp technical move in either direction, “unless a fundamental force drives a quick return to form,” such as direction from BSP rates.

For this week, investors are expected to take cues from the BSP’s upcoming policy meeting, according to Tantiangco.

“While policy rates will most likely be held at current levels, investors are expected to watch out for the BSP’s cues on their policy outlook,” Tantiangco said.

“Cues of prolonged monetary tightening are expected to dampen sentiment, while cues of rate cuts are expected to do the opposite. Next week, investors may also look toward our labor force survey and foreign trade data for clues on the local economy’s health,” he added.

Immediate support for this week is seen at 6,700 to 6,800, while resistance is at 7,000.