Market seen to enter consolidation phase

The local stock market is expected to enter a consolidation phase this week with few investors seen willing to take strong new positions amidst an absence of fresh leads and the ongoing hostilities in Mindanao.

Last week, the main composite index fell 2.6 percent or 71.97 points week-on-week to 2,653.18 as crude oil prices rallied after the dollar tumbled against major currencies in the world.

Analysts said much of the market interest this week will focus on some important data from the US, and on the gross domestic product (GDP) numbers to be released by the government.

“Investors will be looking at some important data related to the slumping housing sector. Both existing and new home sales will be due next week together with latest crude oil inventories and consumer confidence data,” said AB Capital Securities’ Jovis Vistan.

Vistan said concerns over the financial health of the US would continue to keep investors cautious.

 “We still have a long way to go before we can really say that we have gone full circle with regards to the US financial crisis. The threat remains real and the local economy is vulnerable to a global recession. Investors should shelter themselves in cash and continue to use rallies as selling opportunities,” Vistan said.

Another concern is the stalled peace talks between the government and the Moro Islamic Liberation Front (MILF) after the Supreme Court blocked a move to expand the Muslim autonomous region in Mindanao. 

Stock portal 2tradeasia.com said the market is expected to trade between 2,680 and 2,700 with the immediate support pegged at 2,650.