Market weighs Omicron, Fed rate hike

Share prices are expected to trade sideways this week due to uncertainties over the Omicron variant and a looming rate hike from the US Federal Reserve.

“We will continue to monitor developing stories on the Omricon variant as we believe that this will (impact) significantly,” Ralph Fauso, research analyst from UTrade, an online stock trading platform of Unicapital Securities, Inc.

Some analysts, however, noted that the economic recovery was gaining ground on easing mobility restrictions, a significant drop in COVID-19 cases and an increase in the vaccination rate.

The expected hike in US interest rates will also likely affect investors’ sentiments in the coming days. US inflation rate hit a 39-year high to 6.8 percent in November year-on-year amid a spike in food and fuel prices. This could prompt the Federal Reserve to begin raising its benchmark short-term interest rate sooner and higher than previously expected.

The Philippine Stock Exchange Index is seen trading between the 7,000- and 7,300-point levels over the near term period,

The PSEi posted a weekly gain of 1.9 percent to close a 7,192.17 on Friday after four weeks of decline as the Philippines remained a low-risk destination.

Except for mining and oil which declined 1.8 percent, all other sub-indices ended higher, led by services which climbed 2.9 percent, holding firms which advanced 2.5 percent, and financial which rose 2 percent.

Foreign investors were net buyers for the week by P7.9 billion, while the average daily value traded fell to P9.6 billion from previous week’s average of P14.6 billion.

Weekly top price gainers were PLDT Inc., which climbed 6.5 percent to P1,730; Wilcon Depot Inc., which increased 6.5 percent to P33; and Ayala Corp., which iadvanced 5.5 percent to P869.

Weekly top price losers were MerryMart Consumer Corp., which dropped 12.4 percent to P2.55; DoubleDragon Corp., which declined 7 percent to P7; and 2GO Group Inc., which fell 4.8 percent to P7.60.

Meanwhile, Wall Street stocks capped a strong week with a fresh record on Friday despite the latest spike in US consumer prices that has bolstered expectations the Federal Reserve will accelerate plans to lift interest rates.

Following a down day in leading Asian and European equity markets, the broad-based S&P 500 piled on 0.9 percent to finish at 4,712.02, eclipsing a record from last month and scoring a weekly gain of nearly four percent.

The gains came even as the  Labor Department reported that the consumer price index jumped 6.8 percent last month compared to November of last year, its biggest gain since June 1982, as prices for gasoline, used cars, food, rent and other items continued to climb.

Markets took the data in stride in spite of the eye-popping figure, in part because inflation was largely expected. 

“As long as things happen inside of consensus, the market’s had enough time to digest this,” said Art Hogan, chief strategist at National Securities.

And he noted that investors also are relieved that the latest COVID-19 strain appears less virulent than earlier variants. With AFP