Higher oil prices may keep PSEi under pressure

Investors are expected to remain defensive this week as surging oil prices, renewed geopolitical conflict and expectations of higher interest rates continue to cloud the outlook for Philippine equities, according to F. Yap Securities Inc.

Also, Philstocks Financial Inc. research manager Japhet Tantiangco said the market’s support is seen at 6,150, while resistance is seen at 6,400.

“With all the headwinds at play, the local market could move with a downward bias in next week’s trading. Hence, investors are advised to be cautious,” Tantiangco said.

F. Yap said the market would likely stay focused on high-conviction dividend plays, energy and infrastructure stocks with strong pass-through advantages, while selected financial shares could benefit from a “higher-for-longer” interest rate environment through sustained net interest margins.

The brokerage warned that volatility in crude prices remains the key risk to watch as supply disruptions around the Strait of Hormuz and the Red Sea continue to fuel uncertainty.

While West Texas Intermediate crude futures are hovering near $92 per barrel and Brent crude has climbed above $100 per barrel, F. Yap said it does not expect oil prices to stay elevated over the long term. It cited anticipated supply additions from the United Arab Emirates and the potential fragmentation of the Organization of Petroleum Exporting Countries by 2027.

Still, it believes geopolitical tensions could keep a risk premium embedded in oil prices throughout the third quarter.

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The brokerage also said the energy shock has prompted markets to price in one to two additional US Federal Reserve rate hikes, delaying expectations of monetary easing.

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