Downward bias still seen for local shares

The local bourse is seen to continue trading with a downward bias as earlier optimism diminishes and pandemic worries linger, an analyst said.

Last week, the main index closed another trading week in the red as it slid down to the 7,000 territory.

The benchmark Philippine Stock Exchange index (PSEi) declined by 1.32 percent or 94.46 points to finish at 7,045.83 on Friday amid the lack of fresh catalyst to spur the market.

Philstocks Financial Inc. senior research analyst Japhet Tantiangco said the market’s bias for this week is still seen to be on the downside due to waning optimism and lingering pandemic woes.

He added that the report of more cases of the new variant of the coronavirus disease 2019 (Covid-19) in the country aggravated pandemic-related worries.

The Department of Health on Friday night confirmed the detection of 16 additional cases of the new Covid-19 variant in the country, bringing the current total to 17.

“The further spread of the new strain in the country is expected to weigh on market sentiment since it poses the risk of returning to the more stringent social restriction measures which is seen to derail our economic recovery,” Tantiangco explained.

Tantiangco added that investors are also anticipating the release of the fourth quarter or 2020 full-year gross domestic product data.

“While a full-year contraction is already seen to be priced in, investors are expected to look towards the fourth quarter 2020 figures to see if there will be a significant improvement compared to the preceding quarter,” he said.

Tantiangco said local shares might test its 50-day exponential moving average currently at 7,005.71, while next support is seen at 6,900.

Resistance, meanwhile, was placed at the 7,150 to 7,200 range.