Peso, oil risks keep stock investors cautious

Philippine stocks may face cautious trading this week as peso weakness, elevated oil prices and the prospect of further interest rate increases weigh on investor sentiment, according to F. Yap Securities Inc.

In its outlook for Nov. 2-6, the brokerage said investors would also scrutinize corporate earnings guidance for signs that higher borrowing costs could delay expansion plans or affect dividends.

F. Yap identified a break below 5,600 as a signal to reduce exposure further, while a sustained close above 5,800 could support additional buying.

The benchmark Philippine Stock Exchange Index (PSEi) ended last week at 5,680.35, down 0.84 percent.

The peso closed at P63.74 against the dollar on Friday after reaching P64.20 during the week, according to the report.

F. Yap said a weaker currency could compound pressure from elevated oil prices by making imported fuel and food more expensive.

The firm warned that these conditions could weigh on consumer confidence during the holiday quarter.

The brokerage expects a possible US Federal Reserve rate increase on Dec. 9, followed by another Bangko Sentral ng Pilipinas hike on Dec. 17.

This scenario could limit gains in rate-sensitive stocks before year-end.

The Fed kept its benchmark rate at 3.75 to 4 percent at its latest meeting, the report noted.

Beyond quarterly earnings, F. Yap said management commentary would be crucial in assessing companies’ prospects.

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With funding costs higher and the peso under pressure, the brokerage expects some property developers and conglomerates to reduce or postpone capital expenditures for 2027.

Such decisions could also affect cement producers and construction suppliers.

Investors should likewise watch for possible changes to dividend payouts, it added.