Stock market to track overseas developments


With not much happening in the local side, Philippine stocks will again follow developments overseas, which could either upset or cheer equities investors.

“The lid on optimism and the veil of pessimism should begin to lift as the previously hard-line contending positions on extending the US borrowing limit appears to thaw,” Accord Capital Equities Corp. analyst Jun Calaycay said.

He even said that Philippine shares should take on a positive bias this week, making an attempt to break past 6,600 point en route to 6,700 points as “conversations” between the White House and House Republicans continued through the weekend.

“All told, each side of the issue agree that the US can afford neither an extended shutdown nor going into default on its maturing obligations,” he added.

However, Jonathan Ravelas, chief market strategist of BDO Unibank Inc., said that volatility and uncertainty in the market will persist until October 17 (US time), the deadline for raising the debt ceiling, noting that the movements in the stock market next week will rely heavily on the decision of US lawmakers.

“Expect the market to range within the 6,000 to 6,500 levels. A sustained move to about 6,500 could try the 6,700 levels,” he noted.

The Philippine Stock Exchange index closed the previous week at 6489.80, up by 1.55 percent from the earlier week’s level, with the index managing to break the 6,500-point resistance level to reach a high of 6,536.85. However, profit-taking occurred and pared down some of the gains.

“The belief that the US lawmakers are moving toward an agreement to increase the debt ceiling, and avoid a default provided a sigh of relief to Wall Street. Republican lawmakers are considering signing on to a short-term increase in the $16.7-trillion US debt ceiling to buy time for negotiations on broader policy measures,” Ravelas said.

“In addition, Janet Yellen’s nomination as Federal Reserve chairman brought market sentiments up, as investors believe that she won’t rush the withdrawal of the monetary stimulus. Similarly, the local stock market players enjoyed some gains,” he added.


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