Trade war casts shadow on PSEi

The possibility that the global trade war will escalate may cast a shadow over the local bourse this week despite domestic optimism.

Japhet Tantiangco, research head at Philstocks Financial Inc., said over the weekend the stock market was currently at attractive levels, thus opening opportunities for bargain-hunting.

The Bangko Sentral ng Pilipinas’ move to cut the benchmark rate for overnight borrowing by 25 basis points to 5.5 percent also improved sentiment.

Last Friday, the benchmark Philippine Stock Exchange Index (PSEi) closed at 6,082.44, down by 0.03 percent week-on-week, marking a five-week losing streak.

So far, the local stock barometer is down 7.14 percent from the beginning of the year.

While there is room for a rally, Tantiangco warned that investors may also take a cautious stance during the shortened trading week—there will be no trading on Thursday and Friday due to the Holy Week holiday—especially as they await the next chapter of the global trade war.

“Worries over the global economy amid the US’ protectionist policies and the possibility of retaliation by other countries may continue to weigh on sentiment,” he said.

Volatility

Unicapital Securities Inc. research head Wendy Estacio-Cruz also pointed out that the heightened tariffs on Chinese imports and further trade policy changes could contribute to the market’s current volatility.

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The PSEi has recovered from its recent descent into a 30-month low, but the back-and-forth tariff adjustments between the United States and China affected overall sentiment.

While US President Donald Trump opted to temporarily halt most reciprocal tariffs for 90 days, he did not extend this to China, which was slapped with a 125-percent duty. Beijing then raised its retaliatory tariff on Washington to 84 percent from 34 percent previously.

Locally, Cruz said traders would look at upcoming economic indicators, including the release of February cash remittance data on Tuesday.

“We expect the index to continue trading within the 5,800 to 6,300 range, as market movements remain largely influenced by developments in the US,” she added.