STOCKS are seen to rebound this as the coronavirus disease 2019 (COVID-19) in the capital continues to improve and as companies release their financial reports.

The benchmark Philippine Stock Exchange index (PSEi) went down 21.55 points or 0.29% to end at 7,251.97 on Friday, while the broader all shares index slipped 5.41 points or 0.14% to close at 3,856.08.

Week on week, the index retreated 41.55 points from its 7,293.52 close on Jan. 22.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in an e-mail sent over the weekend that even though the PSEi traded lower, it still ended among one-month high despite the decline in other stock markets due to the hawkish signals from the US Federal Reserve.

Analysts said for this week, investors will take their cue from the continuous decline in COVID-19 infections in the National Capital Region (NCR), the release of inflation data and companies’ financial reports, as well as the effect of the Fed’s stance on local monetary policy.

Diversified Securities, Inc. Equity Trader Aniceto K. Pangan said the downgrade in NCR’s COVID-19 infection risk level to moderate from high is seen to boost market sentiment this week.

The Health department on Friday said Metro Manila is now just at moderate risk for COVID-19 following a 67% decline in new cases.

Health Undersecretary and spokesperson Maria Rosario Clarissa S. Vergeire said in a press briefing that NCR logged an average of 4,398 new COVID-19 cases last week, down from the 13,298 recorded the week earlier.

“Company earnings will start coming out this February, then investors will be waiting for the PSEi index rebalancing announcement,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

Mr. Limlingan added that the January inflation report to be released on Friday is also among this week’s trading drivers.

Online brokerage 2TradeAsia.com added that the Fed’s stance will continue to affect sentiment.

“The anxiety may linger until the second quarter this year when elections activity is projected to drive the CPI (consumer price index) artificially higher,” 2TradeAsia.com said in a market note sent over the weekend.

The Fed on Wednesday indicated it is likely to raise rates in March, as widely expected, and reaffirmed plans to end its pandemic-era bond purchases that month before launching a significant reduction in its asset holdings, Reuters reported.

Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno earlier said they are unlikely to increase rates in the first half of this year as it waits for the economic recovery to become entrenched and unemployment to fall. The central bank has kept borrowing costs at record lows since 2020.

The Monetary Board will hold its first meeting on Feb. 17.

2TradeAsia.com and Mr. Pangan both put the PSEi’s support at 7,200 and resistance at 7,400. — M.C. Lucenio with Reuters