Shares seen to move sideways amid profit taking

Philippine shares are expected to move sideways for the trading week as analysts are projecting investors to book profits after the market’s strong finish last week. 

On Dec. 15, the Philippine Stock Exchange Index (PSEi) improved by 67.96 points or 1.06% to 6,478.44 while the broader all shares index jumped by 14.59 points or 0.43% to 3,409.55.

Compared with the earlier week, the main index climbed by 243.67 points from its 6,234.77 close on Dec. 7. 

Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message that the local bourse was carried by strong trading activity.

“The local market had a good run last week, particularly the last two trading days, which were backed by strong trading activity. The US Federal Reserve’s signal of three possible 25-basis-point rate cuts next year proved to be a strong catalyst that can spur market optimism,” Mr. Tantiangco said. 

However, Mr. Tantiangco said the local bourse could move sideways during the upcoming trading week, warning of possible profit taking. 

“Next week, the policy easing prospects of the Fed may still provide support to the local bourse. However, we advise caution as the market’s steep rally last week opens the possibility of profit-taking,” Mr. Tantiangco said.

Mr. Tantiangco also said that the latest policy move of the Bangko Sentral ng Pilipinas (BSP) could influence the market’s movement next week.

On Dec. 14, the BSP opted to keep its key rate unchanged at 6.5% for a second straight meeting but signaled a “tighter-for-longer” policy until inflation expectations have become more firmly anchored.     

“Investors may also digest the results of the BSP’s latest consumer and business confidence surveys which have reflected less upbeat results with respect to sentiment on the economy’s future,” Mr. Tantiangco said, adding that the central bank’s “still tight policy outlook may weigh on sentiment.”

Online brokerage 2TradeAsia.com said in a market report that the local market was buoyed by the “dovish comments” of central banks for 2024. 

“Bulls went on a buying spree, boosted by central banks’ dovish comments for 2024. The PSEi breached the 6,400 key resistance level. The BSP maintained rates as expected, and similarly positive outlook for next year should only support our overweight case for local equities,” 2TradeAsia said. 

Last week, the US Fed kept its benchmark overnight borrowing rate at the 5.25% to 5.5% range amid easing inflation. It also hinted that there would be at least three rate cuts next year.

In its report, 2TradeAsia projected the immediate market support to range from 6,200 to 6,300, and the market resistance at the 6,600 level. 

“Markets hyper-fixated on interest rate cycle shifts tend to gyrate heavily in tandem with macro headlines. Take advantage of rallies to make quick profit off short-term trades, but do not lose sight of 2024, which is shaping up to be a year with more meaningful and impactful recovery,” it added. — Revin Mikhael D. Ochave