THE stock market could take a breather this week as investors weigh developments in the Middle East against lingering inflation pressures and a still-restrictive monetary policy environment.
The Philippine Stock Exchange index (PSEi) closed Friday at 6,135.35, up 3.81 percent week-on-week, holding above its established 5,800 to 6,150 consolidation range.
Sentiment had improved as a US-Iran peace deal helped stabilize global oil prices and supported risk appetite, but this could change after Iran on Saturday said it had again closed the Strait of Hormuz due to continued Israeli strikes against Hezbollah in Lebanon.
Iran said the Israel-Hezbollah conflict would top the agenda of talks with the United States on Sunday.
Online brokerage 2TradeAsia.com said market conditions were showing a “gradual return to normalcy,” with investors gradually regaining conviction as external risks ease.
It noted that the PSEi remained in a consolidation phase but was continuing to find support from selective buying in financials and index-heavy counters, with improving liquidity helping sustain participation in the market.
“Markets are slowly transitioning into a more stable trading environment as external shocks moderate,” 2TradeAsia said.
Philstocks Financial Inc. research manager Japhet Tantiangco said sentiment was supported by bargain hunting and improving global cues.
“Investors are taking advantage of dips as geopolitical tensions ease and valuations become more attractive,” he added.
Tantiangco said that while the market remained driven by external catalysts, trading opportunities continue to emerge in select large-cap names, particularly as investors reassess inflation and interest rate expectations.
Michael Ricafort, Rizal Commercial Banking Corp. chief economist, also said that the local market was in a consolidation phase with direction still closely tied to US economic data, oil price movements and global interest rate expectations.
On the domestic front, the Bangko Sentral ng Pilipinas’ 25-basis-point policy rate hike last week to 4.75 percent is expected to continue to guide positioning.
While higher rates support banking sector margins through wider net interest spreads, they also weigh on rate-sensitive sectors such as property and consumer stocks.
Analysts cautioned that near-term upside may remain capped due to a heavy pipeline of liquidity events, including upcoming corporate earnings, index rebalancing and potential equity listings that could draw funds away from the secondary market.
NAZYLEN JOY MABANGLO
