MARKET OUTLOOK

Local stocks continued to climb on Thursday as investors brushed off ongoing developments in the US-China trade war.

The index closed positive after the banking, services, and industrial sector lifted the PSEi due to strong foreign buying activity. Despite the threat that China might use rare earth exports as weapons against the US, the market defied these news and still posted gains.

US-China trade tensions continue to weigh on stocks after Chinese state media reports underlined the country’s scope to use rare-earth minerals, used in the production of an array of devices such as mobile phones, computer memory chips and rechargeable batteries, as an economic weapon.

US companies are years away from challenging Chinese dominance of rare earth minerals due to a lack of domestic processing facilities, ensuring the Asian nation will maintain its near-monopoly on refining and powerful leverage in trade talks.

In an escalation of the trade conflict between the two countries, state media on Wednesday implied China could restrict rare earth sales to the United States, stoking fears about Beijing’s role as a supplier.

The US has excluded Chinese rare earth imports from recent tariff hikes, along with some other critical Chinese minerals. China, however, has raised tariffs on imports of US rare earth metal ores from 10% to 25%, making it less economical to process the material in China.

U.S.-China trade war tensions could continued to weigh on sentiment after Beijing accused Washington of "naked economic terrorism.

Traders will continue to digest the latest headlines on trade amid increasing expectations for a prolonged U.S.-China trade war.

Conflicting comments on trade talks from President Donald Trump and Beijing may reinforce investor nervousness that a lengthy battle could be in the offing and harm global growth.

The market is coming to that realization that we are not getting really clean or clear information and it is going to be a lot of noise and just prepare for that.

It is a difficult market right now. There are a lot of macro signals that are starting to roll over and the question is the trade dispute causing that or is it other factors.

The trade jitters will continue to help sustain demand for safe haven debt.