Investors are likely to take a cautious stance this week as they opt to wait for any belated global reaction to the incoming administration of US President-elect Donald Trump.
Trump, who had previously served as the 45th president of the US, will be sworn into office again, this time as America’s 47th president, in Washington DC on Monday.
Markets took a beating in past weeks hounded by risk aversion with Trump dishing out anti-immigration and protectionist trade policies especially against trading partners China and Mexico.
Japhet Tantiangco, analyst at Philstocks Financial Inc., said caution will still rule this week’s trading “amid the lack of fresh leads.”
He expects investors to wait for new catalysts, or take their cure from other financial markets. “Last week, we saw the market decline due to the rise in local long term treasury yields. A continuation of their rise may pull the equities market lower while a drop in rates may lead to the opposite,” Tantiangco said.
There may also be “episodes of bargain hunting,” he added.
Capital markets around the world have been plagued by anxiety in light of the incoming Trump administration’s political and economic agenda, according to online stock brokerage 2tradeasia.com.The uncertainties surrounding the US economy have been read by global markets as pain points, it said.
The series of corrections the local market had gone through brought the main PSEi to a seven-month low.
The recent correction in local equities erased gains made over the past 1 to 2 quarters, while earnings multiples have gone south, according to 2tradeasia.
“That being said, the risk embedded with current prices may have some staying power in the medium-term,” it said.
The brokerage’s position is to trade in selective stocks, with the earnings season from end-Jan. to mid-March “potentially providing windows to spark slumbering animal spirit,” it added.