SHARE prices are expected to remain under pressure this week as upcoming inflation and first-quarter growth data add to ongoing worries such as a weakening peso and the continued impact of the war in the Middle East.
The benchmark Philippine Stock Exchange index (PSEi) closed lower on Thursday, shedding 1.84 percent week on week to 5,833.64 as investors stayed on the defensive amid inflation concerns, record peso lows and surging global oil prices.
The decline, analysts said, reflected continued risk aversion with participants having opted to scale back positions amid mounting external headwinds and ahead of this week’s release of key economic data.
Philstocks Financial Inc. research manager Japhet Tantiangco said the local market was likely to move with a downward bias, tracking global uncertainties tied to energy prices and interest rate expectations.
Brent crude has been hovering near the $110-per-barrel level due to the lack of progress in negotiations between the United States and Iran.
Elevated oil prices have been feeding into domestic inflation, and also pulled down the peso, which breached the P61 to the dollar mark last week.
The currency hit a record low of P61.567:$1 last Thursday and closed out April at P61.485 to the greenback.
Analysts said a sustained decline will further dampen foreign participation and also add to inflationary pressures.
“With these upside risks to inflation, expectations of further tightening by the BSP (Bangko Sentral ng Pilipinas) remain,” Tantiangco said, noting that the central bank may have limited room to ease policy in the near term.
Despite the challenging backdrop, however, he said that current market levels may already present bargain opportunities, although caution is still warranted given prevailing downside risks.
In addition to April inflation data due Tuesday and first-quarter gross domestic product growth results out Thursday, investors will also be monitoring today’s release of April manufacturing PMI by S&P Global and March unemployment figures scheduled for release on Wednesday.
Online brokerage 2TradeAsia.com likewise flagged a challenging environment for equities, citing “heightened risk aversion” driven by geopolitical tensions, a stronger US dollar and sticky inflation.
It said that sustained oil prices above $100 per barrel could raise the likelihood of rate hikes in the United States, strengthening the dollar and weighing on emerging markets like the Philippines.
2TradeAsia said that investor focus could shift to corporate earnings and forward guidance, particularly on how companies are managing higher input costs and protecting margins.
It added that while the broader environment remained uncertain, lower share prices have started to lift dividend yields in select stocks, offering potential opportunities for income-focused investors.
NAZYLEN JOY MABANGLO
