At risk of dropping below 7,000, the stock market is trying to tame virus fears

The benchmark Philippine Stock Exchange Index (PSEi) is set to continue its range-bound movement into the coming week, although eyes remain on the critical support area near 7,000 as risk aversion builds.

BDO Unibank Inc. chief strategist Jonathan Ravelas still expects “short-term” consolidation between the 7,000 and 7,300 levels.

The PSEi fell 1.57 percent to 7,011.11 last week after the government raised alert levels in Metro Manila and other provinces over COVID-19 infections after the holidays.

The country registered 26,458 new cases on Saturday, surpassing the peak in daily cases during the Delta wave last year.

Shares in the United States also fell after the US Federal Reserve signaled that market-supporting low interest rates would be raised earlier than expected to curb rising inflation.

In the Philippines, the government reported that inflation declined to 3.6 percent last December, its lowest pace in 2021 and lower than most analysts’ forecasts.

Still, full-year inflation reached 4.5 percent, the highest in three years and above Bangko Sentral ng Pilipinas’ target of 2-4 percent.

Rising COVID-19 numbers and possible new movement restrictions will continue to weigh on investor sentiment.

Ravelas said a breakdown below 6,950 traders would then target 6,800 to 6,500.

“Nevertheless, we expect PSEi to continue an upward trend in 2022, with the expected rapid [gross domestic product] growth in 2022 (boosted by the May presidential election), aided by robust consumer spending,” said First Metro Investment Corp. and University of Asia and the Pacific meanwhile in a separate report. INQ

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