LOCAL stocks are expected to trade sideways this week as investors remain cautious amid inflation concerns, the prospects of a further policy tightening, continued weakening of the peso against the US dollar, and the ongoing war in the Middle East.
The benchmark Philippine Stock Exchange index (PSEi) closed at 5,961.40 on Friday, up 0.7 percent from Thursday but down 0.3 percent week-on-week, as late bargain-hunting offset foreign selling.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said that despite the Friday rebound, the market still ended the week slightly lower versus the previous week as investors continued to price in global and domestic risks.
Ricafort noted that while US equities remained near record highs, helping support sentiment, expectations of possible further rate hikes by the Bangko Sentral ng Pilipinas (BSP) weighed on growth-sensitive sectors.
He added that the peso remained near record lows, keeping inflation risks elevated and limiting market upside while foreign flows remained volatile during the week.
Online brokerage 2TradeAsia.com, meanwhile, said the index slipped on a weekly basis on the peso’s persistent weakness and elevated oil prices with the ongoing Middle East war continuing to dampen investor sentiment, offset only by late bargain hunting.
The brokerage noted that turnover last week weakened sharply from the previous weeks and that foreign investors had turned net sellers while sector performance was mixed, with industrials and mining and oil the biggest decliners.
Philstocks Financial Inc. research manager Japhet Tantiangco, meanwhile, said that he expected the market to trade sideways this week as investors take a wait-and-see stance amid conflicting domestic and global signals.
He observed that the index continued to face strong resistance at 6,000 points, with support seen between 5,900 and 5,816.82, while broader support remained at 5,840.
Given the current macro and geopolitical backdrop, analysts advised investors to remain cautious and focus on defensive, high-quality names amid continued volatility.
