THE Philippine market is poised to trudge sideways but with a negative bias as investors closely follow the currently pessimistic outlook on overseas markets.
BPI Asset Management said in a weekly forecast on Friday the PSEi is expected “to move sideways with a downward bias” as a result of the US jobs data. “For next week, expect the PSEi to trade between 7,490 to 7,718.”
On Friday, the US reported 156,000 jobs were created in September – lower than expectations of 176,000 – resulting in declines in the US market.
“Expect the PSEi to continue moving sideways this week, but the convergence of its support and resistance points suggest that a significant movement is about to happen,” said Luis Limlingan, managing director of Regina Capital Development Corp.
He said if the PSEi broke the 7,580 support, the index may go further down below the 7,500 levels. On the other hand, if the resistance 7,720 is broken, an upswing to the 7,800 mark may likely happen.
“Note that the index is still trading in a high-volatility environment so a decisive breach of either levels would immediately trigger strong movements,” Limlingan said.
“Like last week, we are bullish on issues trading in a defined swing pattern while we advise caution on trending issues as they contain a higher relative volatility which makes them vulnerable to market reactions,” he added.
Online brokerage 2TradeAsia.com said market may see uptick as the US jobs data turned out to be “unfavorable for the US Federal Reserve in raising interest rates this December.”
However, a Fed official has noted on Friday that the vote for a rate increase has strengtened.
“Nevertheless, traders still see a lower chance of an interest rate hike, even as some Fed officials already warned them not to rule out the possibility of a hike next month,” 2TradeAsia.com said.
The Fed still has two policy meetings for the year—one in November, the other in December—in which the thorny issue of interest rates will be discussed .
On Friday, the main PSEi declined by 0.55 percent or 41.87 points to 7,578.29, while the All Shares index fell by 0.39 percent or 17.39 points to 4,504.51.