THE market is expected to remain volatile this week as the country continues to log more coronavirus disease 2019 (COVID-19) infections and following the US Federal Reserve chief’s hint that they could keep rates low to support the recovery of the world’s largest economy.

The Philippine Stock Exchange index (PSEi) went down by 33.91 points or 0.49% to close at 6,786.62 on Friday, while the broader all shares index lost 0.89 point or 0.02% to 4,204.11. Week on week, however, the benchmark index increased by 153.40 points from its 6,633.22 close on Aug. 20.

“Technically speaking, the market has been going up the last few days basically carried by telco companies,” Summit Securities, Inc. President Harry G. Liu said in a phone call on Monday.

Diversified Securities, Inc. Equity Trader Aniceto K. Pangan said on Friday that the market went profit taking before the three-day weekend. Financial markets were closed on Monday in observance of National Heroes’ Day.

“Market may continue to be volatile as COVID-19 infection rates remain high at [the] five-digit level with death [rate] at more than 100 daily,” Mr. Pangan said in a text message on Saturday. “But [the market could trade with an] upward bias as US Fed Chair [Jerome H.] Powell reiterated his accommodative stance on the US market with no set date on tapering.”

Mr. Powell said there has been clear progress toward maximum employment and that he was of the view that if the US economy evolved broadly as anticipated, “it could be appropriate to start reducing the pace of asset purchases this year,” Reuters reported.

Meanwhile, the Health department reported 18,528 new COVID-19 infections and a positivity rate of 27.9% on Sunday. This brought the country’s tally to 1,954,023, with 143,221 active cases.

Metro Manila will remain under modified enhanced community quarantine (MECQ) until Sept. 7.

“[The] extended MECQ in NCR (National Capital Region) [is] expected amid new record high local cases, similar to earlier this year. Granular lockdowns starting September 2021, increased COVID-19 vaccinations… alongside [a] new record high US stock markets to continue to support market sentiment,” Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael L. Ricafort said in a Viber message on Monday.

Diversified Securities’ Mr. Pangan expects the market to trade between 6,500 to 7,100 this week.

“I think we’re starting to see some resistance in the buildup to the 7,000 level and the market has been going sharply. There are… overbought signals… showing that there will be a forthcoming correction that is expected in the medium term,” Summit Securities’ Mr. Liu said, adding that progress on the country’s vaccination program and its efforts to curb the spread of COVID-19 will help boost market sentiment. — K.C.G. Valmonte with Reuters

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