Iran-Israel conflict casts shadow on PSEi

Investors will turn their attention to any development in the conflict between Israel and Iran this week as tensions are expected to rise, especially with the possible involvement of the United States.

Wendy Estacio-Cruz, research head at Unicapital Securities Inc., said over the weekend traders would likely “remain cautious amid escalating tensions in the Middle East.”

She said this was so, especially since the conflict posed risks to oil prices and inflation.

The Department of Energy last week warned that the attacks may lead to “major oil price shocks,” with oil firms bracing for supply disruptions.

Last Friday, the benchmark Philippine Stock Exchange Index (PSEi) shed 0.58 percent week-on-week to settle at 6,339.77.

The decision of the Bangko Sentral ng Pilipinas to cut rates by a quarter point to 5.25 percent provided a brief moment of elation. But sentiment quickly turned sour.

This was after US President Donald Trump hinted at possibly launching an attack on Iran. Still, foreign media organizations reported that his decision would be made “within two weeks.”

Cruz also noted that investor focus was shifting to other key economic indicators, including the trade balance and consumer confidence data scheduled for release this week.

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Unicapital sees the index trading within the 6,300 to 6,500 range this week.

Meanwhile, trading platform 2TradeAsia.com pointed out that trade tensions have yet to de-escalate, thus also impacting the local bourse.

At the same time, it noted that the Philippines was becoming a more attractive hub compared with its regional peers, some of which stand to see higher tariffs after America’s 90-day pause.

2TradeAsia sees the market’s psychological support level at 6,300 and resistance at 6,500 to 6,550.