PHILIPPINE STOCKS may struggle to maintain their momentum this week amid a lack of new drivers, as renewed tensions in the Middle East roil markets and drag on investor sentiment.
On Friday, the Philippine Stock Exchange (PSEi) index jumped 1.24% or 78.96 points to close at 6,404.11, while the broader all-stock index rose 0.88% or 30.36 points to end at 3,444.07.
This was its best close in more than four months or since it finished at 6,445.38 on March 3, which was the last time it ended above the 6,400 line.
Week by week, the PSEi increased by 117.41 points from the end of July 10 at 6,286.70.
“Cooler US June inflation attracted buying activity in the local currency, raising the PSEi points 138 to 6,404. This is supported by the expectation that the Federal Reserve will accept the status quo on interest rates that may rise in the decisions of other central banks in the region,” iF. Yap Securities, Inc.
“Decreasing concerns about the Federal Reserve’s policy outlook following signs that price pressures in the US are easing are currently helping to maintain positive market momentum. However, trading remains anemic, which means confidence remains weak,” said Philstocks Financial, Inc.’s Research Manager. Japhet Louis O. Tantiangco in a Viber message.
This week, the renewed conflict between the United States and Iran remains the biggest risk for local business, Mr. Tantiangco.
Potential oil supply disruptions due to the two countries’ war for control of the Strait of Hormuz have pushed Brent crude back above $80 a barrel, threatening the Philippines’ inflation outlook, he said, as local fuel prices are expected to rise this week.
“Spot and forward benchmarks have already priced in the resurgence of tensions in the Middle East, with a return to $80 a barrel following the US maritime embargo on Iranian ports. Domestically, local retail pump prices are now trading two to four deviations above their two-month rolling average, pointing to the price line CPI,” increased by the CPI rate. said.
Mr. Tantiangco added that the recent market rally was largely motivated by hunting, which may lose momentum this week.
“For this to continue, however, incentives must be seen moving forward. Otherwise, along with the prevailing headwinds, we could see a reversal of the local bull market. [this] a week. For a possible boost, the market is expected to look to the second quarter corporate results.”
He noted that the market trend has been bullish since the PSEi was able to finish the week above the 6,400 resistance.
“Going forward, this line may be retested. If the market is able to hold down above the mentioned line, its next resistance is seen at 6,550. The 50-day and 200-day moving averages of the market will form a golden cross,” he said. – Alexandria Grace C. Magno
