Hawkish Fed, $100 oil might test PSEi
Philippine stocks might face a volatile week as investors brace for the US Federal Reserve’s (Fed’s) policy decision while oil prices above $100 per barrel threaten to fan inflation and further weaken the peso.
F. Yap Securities Inc. said the combination of an increasingly hawkish Fed and surging crude prices presented a difficult external environment for Philippine equities.
Philstocks Financial Inc. research manager Japhet Tantiangco said that chart wise, the local market is still considered to be on a downtrend since peaking at 6,488.35 last July 21.
“The market is currently trading with a support at 6,000 and a resistance at 6,150,” Tantiangco said.
Even if the American central bank keeps rates unchanged, hawkish signals could keep US yields elevated and put more pressure on the peso. This could also constrain the Bangko Sentral ng Pilipinas’ policy options.
“Oil keeps climbing and the peso keeps sliding” has become the prevailing theme in the third quarter, according to F. Yap.
F. Yap advised investors to underweight fuel and import-heavy names, including transport, airlines and cyclicals without pass-through mechanisms. It instead favors exporters and dollar earners.
It also expects thin trading volumes for much of the week as funds wait for firmer cues. The brokerage flagged potential fragility around the 6,000 level.
For sector positioning, F. Yap continues to favor mining amid strengthening metal prices.
It said Dominion Holdings Inc. could draw attention ahead of the consolidation of mining rights in the Tampakan copper-gold project.
It also expects some profit-taking ahead of GCash parent Mynt Inc.’s anticipated October listing.
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