Index to move sideways

MANILA, Philippines - The Philippine Stock Exchange index (PSEi) is expected to continue moving sideways this week but with a bearish bias, analysts said.

“Like in the previous weeks, we are still yet to see a clear higher
low base, making our reversal scenario unlikely at this point. The 6,600-point mark remains the level to watch this week,” said Luis Limlingan, managing director at Regina Capital.

On the other hand, Limlingan said a rally past 6,769 would allow further advances toward 6,950 points although sustaining it would be hard due to low momentum.
“Our call of maintaining a defensive stance is still in place but high index volatility will provide trading opportunities, especially during sharp corrections,” Limlingan said.

Jason Escartin of 2TradeAsia.com, meanwhile, said investors would continue to look on external developments.

“After a week-long holiday-induced hiatus, China’s market re-opens this week, starting with the release of its balance of trade data in January.  Closer monitoring is expected on China’s economic standing to validate claims how long a slowdown would persist during its economy’s transition from manufacturing to service-based.  Meanwhile, Japan will also be releasing fourth quarter 2015 gross domestic product, with consensus at -0.7 percent for the quarter,” Escartin said.
Escartin said despite the Bank of Japan’s radical move to impose negative rates, the yen continued to appreciate – contrary to what policymakers intended – owing to the nation’s current account surplus.

Meanwhile, on the US Fed’s future action, this could be influenced by the January inflation figures due by the end of the week.

“Fed chief Yellen’s statement in Congress did little to assuage concerns over its tightening cycle after hinting they’re intent on raising key rates despite recent turmoil in financial markets. At best, investors could only expect a delay in hikes,” Escartin said.
Likewise, movements in the oil market will also continue to influence investors’ decision.

“About a week after talks broke down between Venezuela and Gulf States, UAE’s oil minister said OPEC members are willing to talk with other oil producers about decreasing production, economy,” he said.