LOCAL SHARES are expected to continue declining this week as the outlook for economic recovery remains gloomy here and abroad.

The 30-member Philippine Stock Exchange index (PSEi) closed at 5,838.66 on Friday, down 7.14 points or 0.12% from the last session. The PSEi was also lower by 70.24 points or 1.19% on a weekly basis, marking its second straight week of decline.

Value turnover for the week slumped 28% to an average of P4.21 billion, while net foreign selling dropped 41% to an average of P444.73 million.

“Dreary trades characterized the week, given a dearth of new catalysts to push the PSEi above higher ground,” online brokerage 2TradeAsia.com said in a market note.

Most of last week’s market activity was driven by international events: rising coronavirus cases in Europe, increasing tensions between North and South Korea, and the appeal for a new stimulus package by the US Federal Reserve.

For this week, 2TradeAsia.com said attention will be on the next quarantine measures to be implemented in October and the earnings reports of companies for the third quarter as September ends this Wednesday.

If last week was any indication of how the market will perform this week, the cautious sentiment of investors will likely continue to pull the PSEi lower in the coming days, AAA Southeast Equities, Inc. Research Head Christopher John Mangun said.

“The PSEi is just a few points away from its support at 5,800 and we may see it continue lower to test its major support level at 5,690… The sentiment needs to improve significantly before we could see the market make progress,” he said in a market note.

Mr. Mangun noted the sideways movement of the market may last for several weeks, and only move significantly towards the end of the year. “Consumer spending and business activity in the fourth quarter will have a major impact on where stock prices will go,” he said.

The 9.5% decline that S&P Global Ratings expects for the Philippine economy will also be a blow to investor sentiment, Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said. This weakness is likely to extend this week as investors remain cautious in trading.

“Trading could remain anemic as many stay on the edge amid the market uncertainties,” Mr. Tantiangco said in a text message. Investors will look at upcoming bank lending and money supply data, manufacturing data, and the policy rate decision by the central bank, he added.

2TradeAsia.com is putting immediate support at 5,700 and resistance within 6,000-6,150. AAA Southeast Equities’s Mr. Mangun anticipates support within 5,800-5,690 and resistance within 6,000-6,165.

Meanwhile, Philstocks’ Mr. Tantiangco expects the PSEi to trade between its 5,700 support and its 50-day exponential moving average. — Denise A. Valdez