THE Philippine Stock Exchange index (PSEi) is expected to continue a declining trend this week given a lack of catalysts after earnings season and increased risk sentiment.
The bellwether index on Friday climbed 104.64 points or 1.27% to 8,311.08, and the broader all-shares index rose 39.14 points or 0.81% to 4,873.82 points. The PSEi rebounded after days of downward movements even with the release of better-than-expected third-quarter gross domestic product (GDP) data.
The main index dropped from its 8,433.48 close last Nov. 10. The market was down for most of the week due to profit taking and uncertainties abroad, despite the economy growing 6.9%, above the estimates of analysts. Economists interviewed by BusinessWorld had an average estimate of 6.6%.
“We see some weakness in the market in the coming sessions given 10-year [Treasury note] rate creeping upwards (currently around 5.48%), which indicates increasing risk aversion. Foreign selling increased this week and earnings season has also come to an end, so no new catalysts expected for the meantime. Support is still at 8150 to 8200,” Manuel T. Lisbona, President of PNB Securities, Inc., said in a text message.
Listed companies in the local bourse have wrapped up their submissions of the third-quarter results on Friday, and with the release of GDP data and the 31st Association of Southeast Asian Nations Summit and related events done for the week, investors will be looking at new catalysts to drive the market.
Luis A. Limlingan, managing director at Regina Capital Development Corp., said that investors might take cues from the US Federal Reserve activity index, US jobless claims, minutes of the European Central Bank meeting, and domestic balance of payments.
“The index barely maintained itself above 8,300 level. Volume as of close is significant and still within average. Looking into the indicators, we can see hints of continued decline although as of now the 50-day moving average is respected,” Mr. Limlingan said in a text message.
Meanwhile, Wall Street ended the week on a sour note on Friday, with major indexes slipping modestly as investors weighed the fate of the Republicans’ tax overhaul plan.
Investors have been hopeful that a tax bill under debate in Congress will boost corporate earnings and further fuel the stock market’s record-setting run.
Congressional Republicans took important steps on Thursday toward the biggest US. tax-code overhaul since the 1980s, with the House of Representatives approving a broad package of tax cuts. The debate shifts to the Senate, where a bill has already encountered resistance within the Republican ranks.
The Dow Jones Industrial Average fell 100.12 points or 0.43% to 23,358.24, the S&P 500 lost 6.79 points or 0.26% to 2,578.85 and the Nasdaq Composite dropped 10.50 points, or 0.15% to 6,782.79. — P.P.C. Marcelo with Reuters