• WEEKLY SHARES OUTLOOK

    Caution ahead of Fed meeting, Trump budget proposal

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    CHANCES are the market will take a cautious stance and probably more picky than usual in buying and selling, while the benchmark PSEi moves within the 7,200 to 7,300 range ahead of the US Federal Reserve policy meeting and the Trump administration’s budget proposal both happening in March.

    Online brokerage 2TradeAsia.com noted all eyes will be on the Fed meeting on March 18 to 19 and the budget proposal of the Trump administration.

    The Fed policy officials are expected to pencil in the first US interest rate hike, while the budget proposal is expected to offer clues on the direction of the US economy, particularly “which areas will be prioritized and which government programs will suffer from budget cuts on the back of austerity measures that might be implemented to lower the national debt,” according to 2TradeAsia.

    “Investors should weigh whether the promises of spending $1 trillion on infrastructure, widespread tax cuts and other plans that could benefit the investing community remain true in the actual fiscal budget,” it said.

    Investors might “accumulate undervalued stocks” this week in a bid to realign and organize their portfolios after the peso “fell to its 10-year low and continues to flirt within P50-P51:$1 range,” the online brokerage noted.

    Despite the trading range dictated by the charts, Justino Calaycay Jr., head of marketing and research at A&A Securities Inc., said the market will try to breach the 7,300 mark based on encouraging macroeconomic factors amid discounted risk events on the side of monetary policy.

    “The PSEi will continue to challenge the 7,300 resistance line and, unless events not considered in the calculations intervene, it looks likely to hold support at 7170,” Calaycay said in a market note.

    “Global markets still hold year-to-date gains, showing a positive bias towards sentiments. At this point, most risk events may have already been discounted into prices and markets are simply waiting for confirmatory signals. Surprises are a sudden reversal of the encouraging outlook. Risk events are presented mainly by policy uncertainties, both abroad and here at home,” he added.

    On Friday, the PSEi cut a four-day gain and lost 76.57 points or 1.04 percent at 7,258.99. The wider All Shares declined by 32.19 points or 0.73 percent to 4,395.08.

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