PSEi may move sideways on oil surge, Iran war
By Alexandria Grace C. Magno, Reporter
PHILIPPINE SHARES may move sideways this week as investors weigh last week’s sharp decline against persistent geopolitical risks and rising oil prices.
“The Middle East conflict between US/Israel and Iran was the main headline during the week, prompting risk aversion across the region,” 2TradeAsia.com said in a market note.
The Philippine Stock Exchange index (PSEi) fell 0.94% or 60.12 points on Friday to close at 6,320.41, while the broader all-share index shed 0.87% or 31 points to 3,494.99.
Week on week, the benchmark index dropped 290.83 points from its Feb. 27 close of 6,611.24 as concerns over the escalating war involving the US, Israel and Iran dampened investor sentiment.
Philstocks Financial, Inc. Research Manager Japhet Louis O. Tantiangco said the local market posted a bearish performance last week as geopolitical tensions weighed on risk appetite.
“It was a bearish week for the local market as it plunged by 4.4%,” he said in a Viber message. “In the process, the market has again fallen below the 6,400 level.”
Mr. Tantiangco expects the market to move sideways this week as some investors take advantage of lower valuations after the recent sell-off.
However, he cautioned that a strong rebound is unlikely while tensions in the Middle East remain elevated.
He added that investors would closely watch the government’s response to rising fuel prices, which could affect inflation and consumer spending.
Fuel prices in the Philippines have climbed steadily in recent weeks. Diesel and kerosene have posted 10 straight weeks of increases, whilst gasoline prices have risen for eight consecutive weeks.
For February alone, pump price adjustments resulted in net increases of P3.20 per liter for gasoline, P4.40 per liter for diesel, and P3.50 per liter for kerosene.
The sustained rise in fuel costs comes amid concerns that geopolitical tensions in the Middle East could disrupt global oil supply.
The Philippines, which imports most of its oil requirements, is particularly vulnerable to fluctuations in global energy prices.
The Department of Economy, Planning and Development said authorities are monitoring local fuel price movements and may introduce measures if global oil prices climb sharply.
Aside from geopolitical developments, investors are also expected to watch for additional corporate earnings reports in the coming days, which could provide clues on how companies are coping with rising costs and slowing demand.
Mr. Tantiangco noted that the market’s technical indicators have turned weaker after the recent decline.
The PSEi has fallen below key support levels and short-term trend indicators, reflecting cautious sentiment among investors.
2TradeAsia said inflation data released last week might also influence market expectations for interest rates.
Inflation accelerated to 2.4% in February from 2% in January, according to government data. Although the figure was within the Bangko Sentral ng Pilipinas’ forecast and matched market expectations, analysts said it might keep the central bank cautious about further policy easing.
“Anticipate equities to glide alongside upcoming fiscal intervention,” 2TradeAsia said, adding that economic managers might need to introduce measures such as fuel subsidies and food security programs to cushion the impact of higher oil prices on consumers.
For the near term, 2TradeAsia placed the PSEi’s immediate support level at 6,300, with secondary support at 6,100, while resistance is seen around 6,700 points.
