Market likely to resume upward trend this week

The local stock market is likely to resume upward trend this week, tracking gains in the overseas markets buoyed by Europe and the United States’ aggressive new efforts to stimulate their struggling economies.

Last week, the Philippine Stock Exchange index (PSEi) surged 121 points or 2.33 percent week-on-week to close at 5,322.47, mainly driven by the Federal Reserve’s announcement of an aggressive new stimulus to drive job creation and boost its economy.

The European Central Bank (ECB) likewise announced its own plan to cut borrowing costs of ailing euro zone members.

At home, the Bangko Sentral ng Pilipinas (BSP) maintained key interest rates at 3.75 percent.

“Local monetary authorities’ move to maintain benchmark interest rates will help build momentum, especially with the start of fourth quarter spending season,” said Freya Natividad of local stock portal 2tradeasia.com.

“Lower interest rates are positive for listed firms’ income statement, as debt servicing is kept low. This is also conducive to capex strategy, especially for those that ventured into high-growth, capitalintensive initiatives,” Natividad said.

Natividad said property firms are expected to benefit from a continuous low interest rate environment, especially with the extension of flexible payment terms.

Natividad sees the main bechmark index trading within 5,300-5,400 before re-testing the 5,403 peak last July 4.