PSEi faces prolonged inflation pressure

Philippine stocks might remain under pressure this week as investors grapple with persistent inflation fears, elevated oil prices and mounting geopolitical risks in the Middle East, according to brokerage firm 2TradeAsia.

Immediate support for the Philippine Stock Exchange Index (PSEi) was placed at 5,800, while resistance was seen at 6,050 and 6,300.

Philstocks Financial research manager Japhet Tantiangco said the bourse is expected to take cues from the developments between the United States and Iran,

In its market outlook, 2TradeAsia said the PSEi recently slipped by 15 points, or 0.26 percent week-on-week, to 5,961.40 as a record-weak peso and rising fuel costs dampened investor appetite despite bargain hunting late in the week.

“(A) global bond rout attests to the rapidly accelerating global inflation fears,” 2TradeAsia said. It warned that investors may be underestimating the risk of “structural, energy-fueled inflation.”

The firm said markets were increasingly pricing in the possibility that inflation could remain elevated even if geopolitical tensions eventually ease.

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This environment, it added, may continue to pressure both sovereign and corporate yields while weighing on consumer spending and capital formation in the coming quarters.

At home, 2TradeAsia said the Philippines was entering what it described as an “acute policy crisis,” with the Bangko Sentral ng Pilipinas now facing the difficult task of supporting growth while managing inflation and currency risks.

The firm warned that the market was beginning to prepare for a more prolonged period of elevated prices and weaker peso conditions.