PHL stocks to take cues from US-China trade talks

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THE RESUMPTION of trading today is seen to take cues from the slated signing of the US-China phase one deal tomorrow, as investors around the world keep a close watch on any development between the two countries’ attempt to end their two-year trade war.

The Philippine Stock Exchange (PSE) and the Securities Clearing Corporation of the Philippines shut down yesterday as the operator prioritized “(ensuring) the safety of employees and traders in light of the volcanic ash emission of Taal Volcano.”

The eruption of Taal Volcano on Sunday, which remained active on Monday, led to the evacuation of residents in Batangas, Tagaytay and Cavite. Parts of Metro Manila, including Bonifacio Global City where PSE is headquartered, also suffered from ash fall starting Sunday night.

Before the beginning of the natural calamity, the PSE closed Friday’s session with the main index down 20.87 points or 0.26% to 7,776.77. It fell 80% on a weekly basis.

Despite local events, Diversified Securities, Inc. Equity Trader Aniceto K. Pangan said the eruption of Taal Volcano may not have much effect on the stock market today.

“It’s too early to determine whether this will affect local shares as damages are minimal at this stage,” he said in a text message Monday.

Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco agreed, saying for his part that the casualties “remain limited so far so this may have little impact on…trading.”

“If this escalates into an explosive eruption or if signs will continue to point to one then it may start to weigh on the market. An explosive eruption would cause economic damages which in turn would be negative for the local bourse,” he added.

Given this, both Mr. Pangan and Mr. Tantiangco said the main catalyst of the market today remains to be the Sino-US trade deal signing on Wednesday.

“Investors would be anticipating the signing of the US-China phase one deal. Judging from how the negotiations went, investors realize that even if the two countries are moving forward with the talks, there’s still a lot of worries unless a deal is finally signed,” Mr. Tantiangco said. But he noted the “confirmatory act” could still give the PSEi a lift.

Apart from signing the phase one of the trade pact on Wednesday, the US and China will also be discussing the timetable for phase two of the deal, which investors will consider for any decisions.

Online brokerage said over the weekend it is putting immediate support at 7,600-7,700 and resistance at 7,900 for the week.

Meanwhile, most Southeast Asian stock markets were muted on Monday, as investors awaited the planned signing of the Sino-US phase one trade deal, while Thai shares rose after the country’s government passed a draft budget bill to prop up the economy.

Indonesian shares rose up to 0.4%, and were on track to post a third straight positive session. Singapore’s benchmark index was largely unchanged, while Malaysian shares edged lower. — Denise A. Valdez with Reuters