Investors may stay on the sidelines

Market investors are expected to remain on the sidelines due to lingering concerns over the possibility of a trade war between the world’s superpowers, the US and China.

Global equity markets led by Wall Street have been on a roller coaster ride the past weeks because of the lingering concerns.

The Philippine market may continue to weaken, said Jonathan Ravelas, chief market strategist at BDO.

“Chartwise, the week’s close at 7,945.66 continues to signal further weakness toward the 7,500 to 7,800 levels,” he said.

Immediate support and resistance is seen at between 7,800 and 8,100 level.

Last week, the Philippine Stock Exchange index (PSEi) traded sideways as market players continued to remain on the sidelines amid the rising tension and concerns over the possibility of a trade war between the US and China.

Meanwhile, analysts said investors would also be keeping a close watch on inflation.

“The Bangko Sentral ng Pilipinas is studying the appropriateness of a measured response to inflation. The coming task for policy makers is to carefully evaluate the appropriateness of a measured policy response to firmly anchor inflation expectations,” BSP Governor Nestor Espenilla said.

This as the government reported that March consumer prices rose 4.3 percent year-on-year versus the 4.2 percent median estimate.

Chris Mangun, head of research at Eagle Equities, for his part is looking at a couple of scenarios for this week.

“The first is that the market continues to trade sideways with low volume within the 7,900 – 8,000 area as we only have four trading days and some investors are already enjoying the summer break with their families. The second scenario is that we lose another 200 points to test support at the 7,770 area. The reason for this is investors may continue to pull their money out of blue-chips as some of them break below key support areas and continue to wait till this market bottoms out,” he said.