Market headed for long bear spell – analysts
The stock market may be headed for a longer bear spell that could extend over the next few months, according to fund managers and brokers.
A combination of factors such as the overall negative sentiment, rising inflation and interest rates, lack of liquidity in the market, and surging global oil prices, are expected to curtail the market activities in the next few months.
AB Capital Securities’ Jovis Vistan said the market is in for more volatility this week as investors await the results of the US Federal Open Market Committee’s meeting this week.
“The markets are expecting the US FOMC to take a 180-degree turn in monetary policies next week. We believe that it will not happen as soon as next week. We agree that the Fed will express a hard-line stance on inflation but they will not go so far as to raise interest rates after a series of rate cuts. Raising interest rates will slow down the
Vistan said whatever the decision FOMC will make would affect all major markets.
Aside from the Fed meeting, market players will also be watching out for key numbers like consumer confidence, energy and more inflation data.
“For now, investors are quick on pulling the sell trigger as there are worries that the rise in oil prices and prospects of higher interest rates will derail any chance of a recovery,” Vistan said.
Vistan said the market will trade between 2,500 and 2,700 this week.
Investors are increasingly worried about rising inflation especially after the Bangko Sentral ng Pilipinas (BSP) warned that the country may see double digit inflation as early as this month.
“We originally forecasted that inflation would reach 10 percent in August. However, rising fuel costs and pressures in the prices of rice, corn and sugar have created a major snowballing effect. Record high oil prices have forced business to pass on the higher costs to consumers,” Vistan said.
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