PSEi may retest 6,000 as global risks dampen sentiment

MANILA, Philippines – Local stocks may remain under pressure this week as investors stay cautious over geopolitical tensions and their spillover on inflation, with the main index expected to retest key support levels.

For the week, support is seen at the 6,000 level, which may be tested anew, while resistance is pegged at 6,150. 

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The Philippine Stock Exchange Index (PSEi) slipped to 6,018.62 last week, down 0.67 percent, as risk aversion intensified due to escalating Middle East conflict and a hawkish pause by the US Federal Reserve, according to 2TradeAsia. 

Weakness was broad-based, led by mining and property stocks, while participation thinned and net foreign selling persisted.

Philstocks Financial Inc. research manager Japhet Tantiangco said sentiment this week remains fragile, with many investors opting to stay on the sidelines amid lingering uncertainties tied to global oil prices and the peso’s weakness.

“This week, the local market is still expected to have a bearish default,” Tantiangco said, noting that elevated oil prices and a weaker currency could fuel inflation and weigh on equities.

Still, he pointed out that valuations have become more attractive. As of last Thursday, the PSEi was trading at a price-to-earnings ratio of 10.1 times, below its five-year average of 14.4 times.

For 2TradeAsia, the conflict in the Gulf has evolved into a broader threat to global energy markets, raising concerns over prolonged inflation and a possible synchronized slowdown. 

Local risks

The brokerage added that local risks are compounded by the Philippines’ heavy dependence on imported fuel and relatively weak positioning versus regional peers.

Moving forward, investors are expected to closely monitor developments in the Middle East, as well as the government’s response to rising price pressures. 

Any signs of de-escalation could lift sentiment, while further conflict may drag the market lower.

From a technical standpoint, Tantiangco noted that the PSEi continues to trade below its 10-day, 50-day and 200-day exponential moving averages, signaling a prevailing downtrend. 

He added that the 50-day and 200-day indicators are also nearing a “death cross,” which could reinforce bearish momentum. INQ