Stocks to move sideways on Trump uncertainty

PHILIPPINE SHARES could trade sideways this week on bargain hunting following the market’s recent decline and amid continued uncertainties over the policy direction of US President-elect Donald J. Trump’s administration.

On Friday, the bellwether Philippine Stock Exchange index (PSEi) declined for a fourth straight session, dropping by 0.37% or 24.69 points to end at 6,613.85, while the broader all shares index gained by 0.11% or 4.14 points to 3,739.08.

This was the PSEi’s lowest close in over two weeks or since Nov. 14’s finish of 6,557.09.

Week on week, the PSEi fell by 2.5% or 166.28 points from its 6,780.13 close on Nov. 22.

“Local equities stayed inside last week’s trading band, unmoved by the lack of strong positive catalysts amid the Thanksgiving break in the United States,” online brokerage firm 2TradeAsia.com said in a market note.

“The local market is once again on a decline after failing to break above its 200-day exponential moving average. In the process, the market has broken below the 6,700-6,800 support range. Its MACD (moving average convergence/divergence) line has crossed below the signal line, implying bearish momentum in the short term,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.

For this week, Mr. Tantiangco said Philippine stocks may continue to move sideways.

“With the market at attractive levels, we may see some episodes of bargain hunting. However, we also expect lingering concerns to continue weighing on sentiment,” he said. “These include Mr. Trump’s planned protectionist policies and its impact on global economic prospects, as well as the uncertainties on the Federal Reserve’s policy outlook.”

“Investors are also expected to watch out for our upcoming November inflation data for clues on the BSP’s (Bangko Sentral ng Pilipinas) policy direction. Investors may also watch out for the upcoming S&P Global Philippines manufacturing PMI (purchasing managers’ index) and labor market data for clues on the local economy,” Mr. Tantiangco added.

He placed the PSEi’s support at the 6,400 level and resistance at 6,700-6,800.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort put the market’s immediate major support at 6,600 and resistance at 7,000.

“During the next local policy rate-setting meeting on Dec. 19, the BSP could do a further 25-bp (basis point) local policy rate cut as signaled by some local monetary authorities recently and could match the latest 25-bp Fed rate cut on Nov. 7 and a possible 25-bp rate cut on Dec. 18,” he said.

2TradeAsia.com placed the PSEi’s immediate support at 6,500 and resistance at 7,000.

“With 2025 looming on the horizon, markets are to deal with uncertainties that are likely to keep prices down in the short run. [It is] better that they are priced in now as ignoring uncertainties will not make them go away,” the online brokerage said. — R.M.D. Ochave with Reuters