Escalating Iran-Israel conflict to weigh on PSEi
PHILIPPINE SHARES may drop further this week as market sentiment could remain bearish due to escalating conflict between Israel and Iran.
On Friday, the bellwether Philippine Stock Exchange index (PSEi) fell by 0.27% or 17.24 points to 6,339.77, while the broader all shares index dropped by 0.49% or 18.62 points to 3,760.56.
Week on week, the PSEi went down by 0.87% or 55.82 points from the 6,395.59 close on June 13.
The market’s performance last week was driven by geopolitical concerns over the Iran-Israel conflict as well as the Bangko Sentral ng Pilipinas’ (BSP) policy decision on Thursday, online brokerage 2TradeAsia.com said in a note.
“The market’s wall of worry continues to steepen. The recent flare-up between Iran and Israel dominated global headlines, reviving concerns of oil supply disruptions and clouding inflation outlook just as central banks were trying to pivot. At the same time, trade tensions have not abated materially…,” it said.
“Back home, the BSP’s long-telegraphed 25-basis-point cut finally came through. With inflation soft and the peso stable, the central bank had room to act, and on paper, is in alignment with the easing bias we have flagged in previous notes,” it added.
For this week, market sentiment may remain bearish due to the escalating conflict between Israel and Iran, Philstocks Financial Inc. Research Manager Japhet Louis O. Tantiangco said in a Viber message. “If the said conflict continues to push oil prices higher and cause the peso to depreciate further, then these may pull the local market lower. A further escalation of the said conflict is also expected to be a significant headwind for the local bourse.”
“Technically, the local market is still moving sideways. However, this sideways movement is exhibiting a downward bias, especially with the market being unable to get past its 10-day exponential moving average,” Mr. Tantiangco said. He placed the PSEi’s major support at 6,150 and major resistance at 6,400.
US forces struck Iran’s three main nuclear sites, President Donald J. Trump said late on Saturday, and he warned Tehran it would face more devastating attacks if it does not agree to peace, Reuters reported.
After days of deliberation and long before his self-imposed two-week deadline, Mr. Trump’s decision to join Israel’s military campaign against its major rival Iran is a major escalation of the conflict and risks opening a new era of instability in the Middle East.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in an e-mail that the PSEi’s minor support is at 6,290-6,300 and resistance is at 6,500.
2TradeAsia.com pegged immediate support at 6,300 and resistance at 6,500-6,550.
“In the current environment, portfolio strategy must favor calibration over conviction. Markets remain highly sensitive to exogenous shocks — both geopolitical and policy-driven…,” it said. — Revin Mikhael D. Ochave with Reuters
