Philippine Market Outlook March 27, 2019

MARKET OUTLOOK

Local shares recovered on Tuesday as investors went on bargain hunting following Monday’s massive sell-off, persistent fears about a slowing global economy notwithstanding.

Investors resorted to bargain hunting after the strong sell-off Monday, after US markets opened the trading week lower when data showed weakness on the global economic front. This happened while investors continued to fret over the inversion of the US yield curve signaling a possible US recession ahead.

Financial markets have been reacting to the US yield curve inversion, with long-term bonds now having lower interest rates compared to short-term ones.

With the PSEi's movement yesterday once again taking cues from US indices which also saw a breather, further performances in the coming days might also continue to take cues from Wall Street.

US stocks gained overnight, with financials snapping a five-day losing streak as Treasury yields stabilized above 15-month lows.

There was a stabilization in the bond market. What market players don't want to see is the continuing inversion. The market is on yield watch, there's no doubt about it.

If it persists, the yield curve inversion is seen as an indicator that a recession is likely in one to two years.

The PSEi could sustain a recovery if it breaks the 8,140 resistance level.