PHILIPPINE STOCKS may move lower this week as concerns over the Middle East war and its impact on the domestic economy proceed to weigh on investor sentiment.
On Friday, the Philippine Stock Exchange index (PSEi) fell by 1.21% or 73.30 points to shut at 5,960.97, while the broader all shares index dropped by 0.67% or 23.04 points to three,373.37.
Meanwhile, week on week, the benchmark index rose by 127.33 points from April 30’s 5,833.64.
“The local bellwether staged a firm rebound [last] week, as optimism over a possible Middle East ceasefire sparked a broad-based rally, effectively overshadowing a disappointing 2.8% first quarter GDP (gross domestic product) print and April’s three-year inflation peak of seven.2%,” online brokerage 2TradeAsia.com said in a note.
For this week, Philstocks Financial, Inc. Research Manager Japhet Louis O. Tantiangco said local shares may remain under pressure amid concerns over the Philippine economy and developments within the US-Iran conflict.
“Latest data with March inflation rate at 7.2% and Q1 GDP growth of two.8% show that the local economy is in a tricky spot. With inflation expected to stay elevated within the immediate to medium term, household consumption and ultimately the overall economy may proceed to suffer,” he said.
“Meanwhile, the BSP (Bangko Sentral ng Pilipinas) signaling preparedness to take further motion to regulate inflation spells further challenges to growth. Finally, the federal government’s tempered public infrastructure spending, if it continues, won’t find a way to supply the needed support to the local economy.”
He added that the US-Iran situation stays volatile.
“While a ceasefire remains to be in effect and the 2 are seemingly moving towards a deal, hostilities remain, which include episodes of exchanges of military force. With this, global oil prices remain elevated with the Brent crude currently testing $100 per barrel.”
Mr. Tantiangco said the PSEi’s inability to push past the 6,000 mark last week shows that this stays a robust resistance for the market. Meanwhile, he placed the most important stock benchmark’s immediate support at 5,800.
“At 5,960.97, the local market stays at bargain levels. Nevertheless, given the negative aspects in play, the market may pull back [this] week.”
Meanwhile, for its part, 2TradeAsia.com placed the PSEi’s immediate support at 5,800, resistance at 6,050, and secondary resistance at 6,300.
“The PSEi stays trapped by ‘inert forces’ because the market grapples with a hawkish rate of interest cadence vis-a-vis deep-seated growth anxiety… Ultimately, domestic liquidity stays sidelined, waiting for clearer smoke signals, yet the complexity of the present downside risks suggests that volatility will remain the first feature of the local landscape at the very least until the fourth quarter,” it said. — Alexandria Grace C. Magno