FRESH catalysts will be needed to bring the Philippine Stock Exchange index (PSEi) back into the 7,400 level or even higher, analysts said, after the benchmark ended 1.4 percent down week-on-week last Friday.
The PSEi, which earlier this month hit an over four-year high of 7,554.86, closed out last week at 7,314.24 — recovering from a low of 7,283.79 on Thursday but still lower than the previous Friday's 7,415.73.
Philstocks Financial Inc. research manager Japhet Tantiangco said the bourse remained attractive from a regional standpoint, which could lead to a lift from bargain hunting, but added that it was experiencing difficulties getting past the 7,400-7,500 resistance range.
"Investors are expected to continue in watching out for Q3 (third quarter) corporate reports with good results seen to compel strong buying again in the market," he added.
"The peso's depreciation, now touching the 58.00 against the US dollar level, may weigh on sentiment," Tantiangco continued, with investors "also expected to brace for the US election, which is drawing near."
The peso fell to its lowest in nearly three months on Friday, closing at P58.32 against the greenback.
Unicapital Group research head Wendy Estacio-Cruz said "the PSEi bounced back on Friday, but value turnover remains low, as investors are still concerned about the potential effects of the storm on inflation targets."
Last week's correction, however, was said to be "healthy after the index gained nearly 16 percent year-to-date," she added.
"We now look ahead to the FOMC (Federal Open Market Committee) meeting on October 29-30, followed by fresh catalysts, such as the release of Philippine October inflation data and the US presidential elections on November 5."
Online brokerage firm 2TradeAsia.com, meanwhile, said the impact of severe tropical storm Kristine was partly to blame for the PSEi's drop last week.
"Initial estimates put the affected to be at around 2.3 million locals, primarily in key economic centers that will dent output in Q4 (fourth quarter) and disrupt chains, particularly agriculture and industry in Northern Luzon," it noted.
"A pause from funds might be warranted as the full scale of Kristine's impact has yet to be gauged, not to mention its possible reentry [and] side-by-side with another cyclone (Leon) intensifying over the weekend."
2TradeAsia.com said investors would be welcoming November with "bated breath," adding that the first week of the month would focus on the results of the US elections, which will likely dictate the outlook for global trade and possibly influence monetary policy decisions.
"Dips, and by extensions, corrections, are a normal and frequent part of market cycles — they allow markets to meaningfully digest new data and keep valuations more grounded and allow prices to build a stabler base for the sustainable continuation of a longer uptrend," it said.
"Expect stronger resistance around the current trading band due to short-run weather-related headwinds, amidst escalating global volatility as markets head toward the US elections post-Halloween."
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