Stocks may move sideways on reopening hopes

SHARES could move sideways this week amid expectations of a further easing in mobility restrictions as coronavirus disease 2019 (COVID-19) cases continue to decline.

The 30-member Philippine Stock Exchange index (PSEi) lost 18.77 points or 0.25% on Friday to close at 7,280.57, while the broader all shares index shed 55.59 points or 1.41% to end at 3,878.11.

Week on week, the benchmark index lost 102.27 points from its 7,382.84 finish on Nov. 14.

The market closed lower last week “after some increase in COVID-19 new infections in some countries around the world, especially in Europe, and the lingering global concerns on higher inflation,” Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael L. Ricafort said in a Viber message.

Inflation could “become stickier” in some parts of the world if supply chain disruptions continue or inflation expectations become de-anchored, the International Monetary Fund (IMF) said on Thursday, Reuters reported.

In the United States, the world’s largest economy, inflation is expected to move down in 2022, but policy makers should remain vigilant given upside risks, IMF spokesman Gerry Rice told a regular briefing.

He said central banks need to “stay vigilant” on inflationary pressures and the IMF is working through scenarios on monetary and fiscal policy, including the spillover effects on emerging economies from monetary tightening in advanced economies.

For this week, the market is “anticipating any additional measures to further reopen the economy… in time for the Christmas season,” Mr. Ricafort said.

“Markets [are] also anticipating if the increased vaccinations (against) COVID-19 would already result in further easing of new COVID-19 local cases,” he added.

As of Saturday, the National Task Force Against COVID-19 reported that 32.99 million Filipinos are already fully vaccinated while 40.92 million have received their first dose.

Any announcements about mobility restrictions in the National Capital Region (NCR) will affect market activity, Regina Capital Development Corp. Head of Sales Luis A. Limlingan cited in a Viber message on Saturday.

The capital is under Alert Level 2 from Nov. 5 to 30. OCTA Research Senior Research Fellow Guido David said NCR may be placed under Alert Level 1, the least restrictive level, in December because of the 27% drop in the weekly average of new coronavirus cases and the low reproduction rate.

Mr. Limlingan said global markets will also focus on the release of the minutes of the Federal Open Market Committee’s latest meeting this week.

MSCI’s rebalancing at the end of November could cause fund managers to adjust their portfolios, he added.

RCBC’s Mr. Ricafort said the PSEi’s immediate support is at 7,200 to 7,210, while its next support levels will be from 7,040 to 7,120.

The next important resistance is at 7,400 to 7,500, he added. — B.A.D. Añago with Reuters