PSEi seen sideways on fresh coronavirus concerns
STOCKS may move sideways this week amid volatile trade due to month-end window dressing and concerns over the spread of a new coronavirus disease 2019 (COVID-19) variant.
The bellwether Philippine Stock Exchange index (PSEi) slid 90.83 points or 1.23% to close at 7,278.44 on Friday, while the broader all shares index dropped 41.88 points or 1.07% to end at 3,871.39.
Week on week, the local bourse slipped by 2.13 points from its 7,280.57 close on Nov. 19.
“Last week saw mostly sideways action, with the index even retesting the 7,400 level. However, majority of the sell-off on Friday was attributed to the scare caused by the Omicron variant, which was already detected in several countries and regions, including neighboring Hong Kong,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.
“The week started on a good note, as investors took positively the rollout of COVID-19 booster shots in the country, which in turn sparked hopes for a further reopening of the economy in the coming months. However, sentiment was parred towards the end of the week, amid participants feeling anxious that the US Federal Reserve might raise interest rates earlier than expected,” Timson Securities Inc. Trader Darren Blaine T. Pangan said in a Viber message on Saturday.
On Friday, the World Health Organization (WHO) declared the new COVID-19 variant (B.1.1.529), now called Omicron, as a “variant of concern” and indicated that their preliminary evidence suggests that it has a high reinfection rate.
First detected in South Africa, the Omicron variant has now recorded cases in Britain, Germany, Italy, Belgium, Botswana, Israel, and Hong Kong, Reuters reported.
Meanwhile, most US central bank policy makers are open to speeding up the unwinding of their bond-buying program if high inflation persists, which would lead them to raise interest rates sooner than expected.
For this week, analysts said trading could be volatile due to persistent concerns over the new coronavirus variant.
“Market may recover on window dressing at last day of the month after getting oversold last week, but the new variant of the virus may continue to provide market uncertainties — thus, volatility may persist,” said Diversified Securities Inc. Equity Trader Ancieto K. Pangan said in a text message on Sunday.
He pegged the PSEi’s resistance at 7,419 to 7,475, while support is at 7,209 to 7,049.
Meanwhile, China Bank Securities Corp. Research Director Rastine Mackie D. Mercado said in an e-mail on Sunday that the PSEi may consolidate with 7,000 to 7,100 as its support area.
“Monday’s close could prove to be critical as a break below 7,270 will likely lead to deeper breakdown. Volatility is also likely to pick up in the coming week,” Mr. Mercado added. — M.C. Lucenio with Reuters
