Index tests post-OPEC rally

The stock mark e t enjoyed a post- Organization of Petroleum Exporting Countries ( OPEC) decision rally last week but it remains to be seen whether or not the positive momentum would be sustained, analysts said.

The benchmark Philippine Stock Exchange index ( PSEi) is expected to test the 6,700 to 6,900 levels next week.

“We can expect the index to trade within the 6,700 to 6,900 range for next week, ahead of the Dec. 14 Federal Open Market Committee meeting,” said Victor Felix, equity analyst at AB Capital.

Investors are keeping a close watch on the upcoming meeting of the US Federal Reserve, which is widely expected to raise rates on the back of a growing US economy.

US Fed chair Janet Yellen said an interest hike could be imminent. She said that since the US job market and other economic indicators continue to improve, a move to raise interest rates “could well become appropriate relatively soon.”

The market snapped out of its losing streak last week after the OPEC decided to cap production, pushing global markets including the Philippines higher.

OPEC agreed to slash output to address the global supply glut which has been felt for years.

OPEC agreed to cut 1.2 million barrels per day ( bpd), which was at the upper end of expectations of 0.7 to 1.2 million bpd.

“Our index was on a downtrend early this week ahead of the OPEC meeting and the uncertainty of a production cut. The oil cartel surprised skeptics by agreeing to a broad-based curbing of output , which even included non- member Russia,” Felix said.

Felix said oil prices have been rallying since the announcement, from below $ 45 per barrel to above $ 50 per barrel at present.

“This event may have the positive conclusion in the volatile oil price environment seen this year. Hopefully, member nations can stick to their covenants well into next year, with analysts forecasting WTI crude oil prices to reach $ 70 per barrel by end2017,” he said.