PH shares to move sideways amid lack of leads

Stocks are expected to move sideways this week amid a lack of fresh leads and as the first half of the year comes to a close.

The benchmark Philippine Stock Exchange index (PSEi) fell by 11.36 points or 0.17% to close at 6,393.55 on Friday, while the broader all shares index slipped by 2.94 points or 0.08% to 3,414.75.

Week on week, the PSEi dropped by 114.79 points or 1.76% from its close of 6,508.34 on June 16.

“The local market extended its losses to a fifth straight day… as investors continue to worry over the global economy following the hawkish remarks of Federal Reserve Chairman Jerome Powell, signaling two more possible rate hikes,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.

US Federal Reserve Chair Jerome Powell said on Thursday the central bank would move interest rates at a “careful pace” from here as policy makers edge towards a stopping point for their historic round of monetary policy tightening, Reuters reported.

“We’re at least close to where we think our destination is… and it only makes common sense to move… at a careful pace,” Mr. Powell said at a hearing before the Senate Banking Committee.

“The point” of holding rates steady at 5-5.25% at the Fed’s last meeting, Mr. Powell said, was precisely to slow the speed with which the Fed was raising borrowing costs.

After having raised rates at 10 straight meetings, sometimes by as much as three quarters of a point at a time, the Fed skipped the June meeting. Investors now expect rate hikes to resume in July, with the Fed perhaps evaluating the need for further increases at every other session — a pace common in prior tightening cycles.

For this week, shares are expected to move sideways due to the lack of new leads, AB Capital Securities, Inc. Vice-President Jovis L. Vistan said.

“Bias is negative as the technical charts have turned bearish. Near-term support levels are slowly being tested and showing signs of weakness. One culprit is the lack of volume and market interest. And in such a scenario, the path of least resistance is to go lower. However, given the sound economic domestic fundamentals, downside risk will hopefully be minimal,” Mr. Vistan said in a Viber message.

China Bank Capital Corp. Managing Director Juan Paolo E. Colet said the market’s movement will likely be driven by window dressing and technical trading ahead of the month’s end.

“Investors will also start looking to position for the next half of the year as they assess the outlook for inflation and interest rates, and whether central bankers can ensure a soft economic landing against a backdrop of the most hawkish Philippine and US monetary policy in decades,” Mr. Colet added.

He placed the PSEi’s support at 6,300 to 6,350 and resistance at 6,400.

Philippine financial markets are closed on June 28 for a regular holiday in observance of Eid’l Adha. — AHH with Reuters