Stocks may drop further as market stays cautious

PHILIPPINE SHARES may continue to move lower in the coming days as investors cautiously stay on the sidelines due to the Middle East conflict risks and the upcoming Holy Week break.

On Friday, the Philippine Stock Exchange index (PSEi) fell by 0.19% or 11.37 points to end at 5,972.83, while the broader all shares index went up by 0.05% or 1.75 points to close at 3,335.86.

Week on week, the PSEi went down by 45.79 points from its March 19 finish of 6,018.62.

“The PSEi slid 45 points to 5,972, breaking the psychological 6,000 support zone, as sentiment was locked on headlines in the Middle East. The BSP’s (Bangko Sentral ng Pilipinas) surprise off-cycle hawkish pause failed to soothe jitters surrounding the central bank’s revised 5.1% inflation outlook,” 2TradeAsia.com said in a market note.

“The local market extended its decline to a fourth straight week as worries over the US/Israel-Iran war continue to dominate sentiment,” Philstocks Financial, Inc. Research Manager Japhet Louis O. Tantiangco said in a Viber message. “Trading was also tepid last week, showing that many investors are staying on the sidelines while waiting for the uncertainties to dissipate. Since the start of the war, the local bourse has already lost 9.66%.”

The BSP’s policy-setting Monetary Board kept benchmark rates unchanged during a surprise off-cycle meeting last Thursday amid rising worries about the Middle East conflict’s economic toll.

They were scheduled to have the next regular review on April 23, but BSP Governor Eli M. Remolona, Jr. said they decided to hold a meeting as the economic situation has drastically changed since they last met on Feb. 19.

Mr. Remolona said they stood pat as adjusting their monetary settings would have limited effectiveness as the current inflation risks due to the war in the Middle East are largely supply-driven.

For this week, Mr. Tantiangco said the market is expected to remain bearish due to inflation pressures tied to the war in the Middle East.

“The elevated oil prices and the weak position of the peso are expected to continue weighing on market sentiment,” he added.

On Friday, the peso plunged to a new record low of P60.55 a dollar, down by 32 centavos from its P60.23 finish on Thursday.

Mr. Tantiangco said investors are likely to trade cautiously before the long weekend. Philippine financial markets are closed on April 2 and 3 for Holy Week.

“Chart-wise, last week, the market had a failed attempt in taking its 10-day exponential moving average and the 6,000 level, implying that both remain as strong resistance lines… The local market’s trading range is seen from 5,800 to 6,000.”

For its part, 2TradeAsia.com placed the PSEi’s immediate support at 5,800, resistance at 6,050, and secondary resistance at 6,300. — Alexandria Grace C. Magno