Trading to move sideways amid volatility, headwinds

THE local stock market is expected to trade sideways this week as market sentiment remains volatile amid foreign headwinds.

Philstocks Financial Inc. research associate Claire Alviar told The Manila Times over the weekend that trading was expected to have “sideways movement with a positive bias [this] week, as the slower inflation data may spill over in the market, while US-China trade developments may bring volatility.”
She pegged the resistance level at the 8,000 mark.

The rate of the increase in the prices of goods and services in August eased further to 1.7 percent, the lowest since the 1.8 percent registered in October 2016, the Philippine Statistics Authority reported on September 5.

The figure is lower than July’s 2.4 percent and August 2018’s 6.4 percent.

On September 6, most Asian markets, including the Philippines’, were upbeat following news that the United States and China would resume trade negotiations next month in Washington. This after the world’s two biggest economies slapped new tariffs on each other’s goods worth hundreds of billions of dollars, further souring market outlook.

The trade war between Washington and Beijing, which began early last year after US President Donald Trump accused China of engaging in unfair trade practices, has been rattling global markets for months and dampening overall investor sentiment.

AAA Equities head of research Christopher Mangun agreed with Alviar, saying “international headwinds are spooking investors and the continuous outflow of foreign funds is not helping at all.”
Foreign trading ended in net selling of P29.11 million on Friday.

Mangun also said investors were predicting another policy rate cut in the wake of the newest inflation data, which is expected to boost corporate growth.

Last month, the Bangko Sentral ng Pilipinas’ policy-setting Monetary Board trimmed interest rates by 25 basis points, bringing the overnight borrowing, lending and deposit rates to 4.25 percent, 4.75 percent and 3.75 percent, respectively.

The board is expected to reduce these further at its next meeting on September 26.

“Overall, investor sentiment remains very cautious and investors continue to look at opportunities in second-liners and speculative issues,” Mangun said.

The bellwether Philippine Stock Exchange index rose by 0.45 percent or 35.28 points to finish at 7,933.47, while the wider All Shares jumped by 0.22 percent or 10.74 points to close at 4,785.02 on Friday.