Sustaining the stock market’s momentum this week may prove challenging due to various factors abroad that are expected to affect sentiment. Reduced hopes for US Federal Reserve rate cuts and escalating tensions in the Middle East are likely to weigh down the market, according to analysts.
The benchmark Philippine Stock Exchange index (PSEi) ended last Friday 0.2 percent higher week-on-week at 6,643.18, after gaining for two consecutive weeks. Despite this positive development, analysts warn of potential challenges ahead.
Technical indicators suggest a bullish bias in the market. The 50-day exponential moving average is on the verge of crossing its 200-day counterpart, potentially creating a bullish signal known as a golden cross. This signal indicates the possibility of further market growth.
However, analysts emphasize that dampened expectations for Federal Reserve rate cuts, following higher-than-expected US inflation in December 2023, could negatively impact sentiment. Moreover, concerns over escalating tensions in the Middle East, highlighted by the recent seizure of an American oil tanker by Iran, add to the uncertainty.
In light of these factors, investors will likely be on the lookout for positive catalysts to sustain the market’s upward trend. The stock market’s performance this week is expected to depend on various key events, including the release of China’s latest economic data, as well as updates on US consumer sentiment and retail sales.
Market participants remain highly sensitive to interest rate and inflation-related forces, and adopting a growth-oriented strategy is advised. Despite the lack of trading volume, analysts remain optimistic about the market’s prospects. They suggest that the PSEi could potentially reach 6,800 in the medium term and even set a target of 7,000.
From a technical perspective, analysts identify the stock market’s support level in the 6,400-6,550 range, while resistance is expected between 6,700 and 6,800.
In summary, analysts express caution regarding the stock market’s momentum this week due to reduced hopes for US interest rate cuts and escalating tensions in the Middle East. While technical indicators suggest a bullish bias, the market’s performance may depend on positive catalysts and various economic data. Investors remain sensitive to interest rate and inflation-related factors, and a growth-oriented strategy is recommended. Despite potential challenges, analysts maintain a positive outlook for the market’s medium-term prospects.
Note: In line with ethical standards, the information presented is based on expert analysis and current events. It is important for investors to conduct their own research and seek professional advice before making any investment decisions.
