Market to move sideways

MANILA, Philippines — The local stock market will continue to move sideways with a downward bias as investors keep a close watch on the government’s COVID-19 vaccination program.

Last week, the Philippine Stock Exchange index (PSEi) slipped seven points or 0.11 percent to close at 6,370, erasing its 109 point rally mid-week. Most sectoral indices gained, led by mining & oil, which rose 10.5 percent; financials, which climbed 0.74 percent and industrials, which rose 0.68 percent.

“Bulls failed to sustain its mid-week momentum as uncertainties on the extension of the modified enhanced community quarantine ultimately pulled the local bellwether lower,” 2TradeAsia said in a report.

For this week, 2TradeAsia sees the PSEi trading at 6,000 to 6,100 with resistance at 6,500.

2TradeAsia said a correction toward the 6,000 level could provide a window to pick-up and average down on potential winners.

Average value turnover increased by 5.13 percent to P5.74 billion, while net foreign selling eased to P530 million, a decline of 39.3 percent week on week.

2TradeAsia said the inflation numbers for April would be crucial for the second quarter and would set the tone for the central bank’s monetary policy move in its meeting on May 13.

“April is the wildcard: pull inflation is expectedly lower due to the enhanced community quarantine reimpositions in key economic centers, but push factors are higher, owing to the dry season where power costs and agriculture input costs are higher,” 2TradeAsia said.

Michael Ricafort, chief economist at Yuchengco-owned Rizal Commercial Banking Corp., said investors would continue to monitor the vaccine supply situation.

“The expected increase in COVID-19 vaccine arrivals in the third and fourth quarter of 2021 could help reduce new COVID-19 cases, justify further re-opening of the economy from lockdowns, improve confidence by consumers and businesses, and provide greater support to the overall economic recovery prospects,” he said.

Likewise, he said, the expansion of the vaccine rollout to include more priority groups such as A4 and some economic frontliners could support the recovery prospects of some businesses.