Another week of cautious trading expected

Local stocks may remain under pressure this week, with the benchmark index seen testing lower support levels as geopolitical risks and oil price concerns dampen sentiment.

In its latest outlook, brokerage 2TradeAsia said the Philippine Stock Exchange Index (PSEi) could hover near the 5,800 level, with resistance seen at 6,050 and a secondary ceiling at 6,300.

The cautious view follows last week’s decline, where the PSEi slipped 45 points or 0.76 percent, to 5,972—falling below the key 6,000 mark—as investors reacted to developments in the Middle East, and a more hawkish stance from the Bangko Sentral ng Pilipinas.

“Sentiment was locked on headlines in the Middle East,” 2TradeAsia said, noting that elevated oil prices and inflation risks continued to cloud the outlook.

The brokerage warned of a sustained “risk-off” environment as the ongoing US-Iran conflict fuels expectations of higher inflation and disrupts global supply chains.

It added that markets may face a potential stagflationary shock, with sovereign yields rising while the US dollar remained a safe-haven asset.

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For the local market, 2TradeAsia said the Philippines may be entering a period of “forced demand destruction.” While tax adjustments could provide temporary relief, they may not be enough to offset the inflationary impact of rising fuel prices, it said.

Ron Acoba, chief investment strategist at Trading Edge Consultancy, said: “[We’re] on the lookout for developments regarding Trump’s extension of the peace plan. Trading will also highly likely be thin as a lot of market participants go on vacation for the Holy Week.”