Rangebound trading seen; global fears cited
Credit to Author: ANGELICA BALLESTEROS, TMT| Date: Sun, 10 Mar 2019 16:21:47 +0000
THE stock market could trade sideways given renewed worries over a US-China trade deal and the global economy.
In a market comment, Eagle Equities Inc. research head Christopher Mangun said he expected the Philippine Stock Exchange index (PSEi) to trade between 7,600 to 7,900 if value turnover remained thin.
“This may be attributed to the fact that the general investor sentiment is cautious … over concerns on the US-China trade deal and worries over the slowdown in global growth,” he said.
News that Chinese exports had plunged by over 20 percent in February and the European Central Bank’s move to slash growth and inflation forecasts sparked a global rout last week.
On Friday, the bellwether PSEi dropped by 1.07 percent or 84.68 points to close at 7,797.11, while the broader All Shares declined by 0.59 percent or 28.74 points to finish
at 4,817.22.
US President Donald Trump’s comments that he would not sign a trade pact unless it was a “very good deal”, along with the release of weak US employment data, also weighed on markets.
Wall Street fell on Friday, down five days in a row in its worst week of 2019 so far.
Fresh US data releases this week, including retail sales and inflation, could influence investor decisions and markets are also expected to be watching the outcome of another Brexit vote this Tuesday.
Mangun, however, said that good news on the domestic front could help sentiment.
“If inflation stays below 4 percent in the coming months, we may see the BSP (Bangko Sentral ng Pilipinas) cut interest rates which will be a major catalyst for the equities market,” Mangun said.
Consumer price growth finally returned to the 2.0-4.0 percent target band in February, easing to 3.8 percent, and investors will be looking for clues as to the outcome of a Monetary Board meeting next week.
In a separate comment, online brokerage firm 2tradeasia.com also said the PSEi could trade “within the range for now” until after the May elections.
Investors, it noted, will be looking forward to the reopening of Congress and whether or not bills such as the Tax Reform for Attracting Better and High-Quality Opportunities (Trabaho) measure are passed.
If approved, the Trabaho bill — which seeks to lower corporate income taxes and streamline incentives granted to investors — would be the second major tax reform approved under the Duterte administration following 2017’s Tax Reform for Acceleration and Inclusion (Train) law.
With a reports from AFP
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