Stocks seen to move sideways

Stocks will continue to move sideways this week as investors weigh the impact of sticky inflation and rising interest rates on corporate earnings.

The local equities market sustained its downward move on the back of a busy week capped by the Bangko Sentral ng Pilipinas’ 50-basis-point rate hike.

The BSP raised its policy interest rate by half a percentage point, bringing the overnight reverse repurchase facility to six percent, the highest in nearly 16 years or since the 7.5 percent rate in May 2007.

The PSEi fell by 97 points to 6,779, down 1.42 percent week on week. All counters fell, led by holdings, mining and oil and property. Average value turnover, meanwhile, improved to P7.43 billion while net foreign selling was sustained, averaging P247 million, down by 31.59 percent.

The benchmark Philippine Stock Exchange index will continue to test the 6,800 level, with its next support level seen at 6,600, according to Unicapital Securities.

For its part, 2TradeAsia sees immediate support at 6,600 to 6,650 while resistance is at 6,850.

This week, 2TradeAsia said, stock market investors would continue to look at fourth quarter earnings results. Index members Ayala Land Inc. and Wilcon Depot are among those scheduled to report results this week.

It said corporate results would particularly look at companies that are able to manage costs in spite of the difficult business environment.

“So far, stories have danced around corporate-level strategies against higher capital costs and ways to grow EPS in spite of difficult macro-events...Cash flow metrics will remain at the forefront, especially as fixed income yields become more competitive versus preferred shares and some reliable high dividend plays,” it said.

Overall, however, 2TradeAsia believes inflation and interest rates would continue to keep market anxiety up over the nearterm, as well as geopolitical tensions that could affect oil markets.