Market faces another week of cautiousness

MANILA, Philippines - The benchmark index, currently trading at a year-to-date loss, is set to encounter another week of cautiousness with a possibility of further downturn.

Foreign news will continue dictating investor sentiments this week, analysts said.

“We expect the Philippine Stock Exchange index (PSEi) to course sideways this week, with a negative bias hinted by technical indicators,” said Abbygayle Estrella, analyst at brokerage firm AB Capital Securities Inc.

Astro del Castillo, managing director of First Grade Finance Inc., said the benchmark index will likely trade sideways as it builds a stronger base at the 5,800-5,900 level until worries on inflationary pressures dissipate.

Week-on-week, the PSEi sank

1.76 percent or 105.05 points to 5,842.88, weaker than the 5,889.83 closing level in 2013.

“Investors groped for form as the market spent the first seven sessions of the year alternating between gains and losses,” said Justino Calaycay Jr., analyst at Accord Capital Equities Corp.

In the meantime, the 6,000 level remains a psychological resistance unless a significant local development will spur sentiment, Estrella said.

In the absence of local leads, major markets overseas will continue to influence trades, del Castillo said, adding that investors will continue to look out for US economic data. On Friday, the US Labor department reported that only 74,000 workers were hired in December, way below the 196,000 that economists had expected.

Important US data include retail sales, import and export prices, Empire State manufacturing survey and weekly jobless claims, which will dictate the pace of the US Federal Reserve’s tapering. Several US companies will also start reporting financial performance.

“We advise investors to be cautious of their positions in the wake of the range-bound trade. The main index is currently trading at the upper band of its sideways movement,” Estrella said.

Jonathan Ravelas, chief market strategist of BDO Unibank Inc., expects the PSEi to range between 5,800 and 5,900, with risks of breaking below the 5,700 territory.