PSEi may extend losses on oil surge, peso slump

By Alexandria Grace C. Magno, Reporter

PHILIPPINE shares may extend losses this week as surging oil prices and a weakening peso deepen inflation concerns and keep investors on the sidelines.

Analysts said sentiment remained fragile as war in the Middle East and a hawkish pause from the US Federal Reserve weighed on risk appetite.

“The local bourse closed the four-day trading week in the red, dictated by persistent risk aversion from escalating Middle East geopolitical tensions plus a hawkish pause from the US Federal Reserve,” brokerage 2TradeAsia said in a note.

The benchmark Philippine Stock Exchange index (PSEi) fell 0.6% or 36.83 points on Thursday to close at 6,018.62, while the broader all-share index declined 0.55% or 18.69 points to 3,344.87. Week on week, the PSEi slipped by 40.32 points.

Markets were closed on Friday in observance of Eid’l Fitr or the end of Ramadan.

Japhet Louis O. Tantiangco, research manager at Philstocks Financial, Inc., said investors largely stayed on the sidelines amid uncertainty.

“Trading was tepid for the most part of the week, implying that many are staying on the sidelines amid lingering uncertainties,” he added.

For the coming sessions, Mr. Tantiangco expects the market to remain under pressure as elevated oil prices and peso weakness fuel inflation risks.

Any signs of de-escalation in the Middle East conflict could support a rebound, while further escalation might drive additional losses, he added.

Investors are also closely watching the government’s response to rising fuel costs and their impact on the broader economy.

The peso’s slide to a record low added to concerns. It closed at P60.10 a dollar on Thursday, weakening by 58 centavos from P59.52 the previous day, according to Bankers Association of the Philippines data posted on its website. The latest level broke its prior record low of P59.87.

Technical indicators also point to continued risks. Mr. Tantiangco noted that the PSEi remains below its 10-day, 50-day and 200-day exponential moving averages, with the 50-day and 200-day lines nearing a “death cross,” a bearish signal for medium- to long-term trends.

“Both the MACD (moving average convergence divergence) line and the 14-day relative strength index are moving downwards, supporting bearish indications,” he said.

He expects the 6,000 level to be tested again this week, with support at 6,000 and resistance at 6,150. Brokerage 2TradeAsia placed immediate support at 6,000, with secondary support at 5,800 and resistance at 6,300 to 6,400.