MANILA - Buying momentum from last week's trades may spill over this week on quarter-end window dressing and improved risk appetite brought about by the US Federal Reserve's move to keep the pace of its economic stimulus at least for now.
With the US central bank's decision giving equities a temporary reprieve and diminishing concerns of a military attack against Syria, markets begin the week with a relatively clean slate as the two biggest concerns that have weighed on sentiments recently were eased off the table, analysts said.
"One thing going for the local market is the approach of the end of third quarter traditionally marked by window-dressing induced increase in share prices, particularly for members of the composite measure," said Jun Calaycay of Accord Capital Equities Corp.
The final week of trades in the first and second quarters delivered gains of 2.2 percent and 5.1 percent, respectively, putting this week's upside target range between 6,560 and 6,750, Calaycay said.
"We see no reason for the index to go down in the near term now that the Fed has postponed its tapering, which has resulted in a risk-on sentiment," said BPI Asset Management in a weekly report.
However, the Philippine Stock Exchange index's may succumb to pockets of profit-taking following the local barometer's 11.96 percent rally since August 28, BPI added.
The Philippine stock market is coming off a strong week of gains, soaring 4.5 percent to close at 6,424.45 after the Fed decided to hold off the tapering of its $85-billion bond-buying program, a huge driver of stock market rallies in the past.
"As the tapering concern moves to the background, Congress and the White House are seen to get entangled in debates over the US debt ceiling. This is no different from the tiff that nearly shut down government in 2011 and, yet again, early this year...A US default, or at least the prospect of it, may once more shatter confidence in equities," Calaycay said.
The US Treasury may hit its borrowing limit by mid-October. The cap must be raised to prevent the world's largest economy from defaulting on its outstanding obligations.
Fears of a government shutdown and conflicting signals from Fed members dragged the Dow Jones industrial average to its biggest daily slide since August 15. The Dow fell 185.46 points, or 1.2 percent to 15,451.09 last Friday.
A Federal Open Market Committee (FOMC) member signaled the central bank could start reducing stimulus next month and another blasted the decision not to taper in September.
"With economic policies in place and expectations for full year economic growth set, we see no immediate factors that will influence the market to move exceedingly higher. Volatility should be expected in the coming days as the eyes of investors will remain on what happens to US in the next weeks or even month," Maria Arlysa E. Narciso of AB Capital Securities Inc.
source: interaksyon.com
