STOCKS are seen to move sideways this week as investors take cues from company earnings, guidance reports and possible monetary stimulus abroad in light of the ongoing coronavirus disease 2019 (COVID-19) pandemic.

The benchmark Philippine Stock Exchange index (PSEi) lost 134.57 points or 2.4% to close at 5,464.98 on Friday. This resulted in an end to the PSEi’s four-week streak of posting increases as it recorded a 5.6% decline last week.

Value turnover came in slower with a 34.4% drop to an average of P5.02 billion. Foreign money still flowed out of the local bourse, but net selling was halved to an average of P617.95 million from P1.24 billion the week prior.

“Sentiment took a hit from negative pricing on crude futures due to concerns over weak demand and rising supply, as well as the extension of the enhanced community quarantine (ECQ) at home from April 30 to May 15,” online brokerage 2TradeAsia.com said in a market note.

The price of oil in United States dropped to below $0 per barrel at the start of last week, resulting in losses in global equities over worries on its possible impact on economies that rely on oil.

The ECQ was also extended for another two weeks in selected areas after April 30, fueling concerns on how businesses can recover following this halt.

Heading into this week, Timson Securities, Inc. Trader Darren T. Pangan said the market may “go sideways as long as the 5,000 support level holds.”

“The sideways trend may help the market gain strength to eventually retest the 6,000 resistance area. Investors are carefully assessing the market as corporate earnings and management guidance reports continue to be released in the coming weeks,” he said in a text message Sunday.

This trading week be cut to four days as the market is closed on May 1 in observance of Labor Day.

2TradeAsia.com said investors will continue weighing how companies will react to the extension of ECQ in Metro Manila, Central Luzon, Calabarzon (Cavite, Laguna, Batangas, Rizal, and Quezon) and other areas across Luzon, Visayas and Mindanao. It noted other areas that are considered “low-risk” and “moderate risk” will be downgraded to a general community quarantine, which may result in gradual reopening of businesses.

“The soonest the mass testing procedure takes place, the higher the chances in getting the local economy restarted on a ‘new normal’ mode. As the restart process is extended, however, the economic dent is bound to affect firms’ financial performance, but it is not too late to recover these dents so long as the restart process is firmly supported with no further disruptions or relapses,” it said.

Aside from local activities, 2TradeAsia.com said investors will keep watch of the meeting of the US Federal Open Market Committee this week, which is expected to result in more monetary easing. “If another rate cut is supported, this would likely ripple into similar actions in the region,” it said.

The brokerage is putting immediate support for the PSEi within 5,200 to 5,300 and resistance within 5,600 to 5,650. — Denise A. Valdez

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