Local equities are expected to remain under pressure this week after the benchmark Philippine Stock Exchange index (PSEi) slid below the key 6,000 level, signaling cautious investor sentiment amid global and domestic uncertainties.
The market finished Friday at 5,943, down 0.93% from the previous week, as participants reacted to higher interest rates and persistent geopolitical tensions. Stock brokerage 2TradeAsia pegged immediate support at 5,800, with resistance at 6,050 and a secondary ceiling at 6,300.
"Lingering uncertainties on the Middle East war amid the lack of a compromise among the countries involved and the expectations of rising inflation and interest rates at home are expected to continue weighing on sentiment," said Japhet Tantiangco, research manager at Philstocks.
He added that sustained weakness in the peso could further dampen the local bourse, though positive developments in Middle East tensions might reverse the bearish bias.
The downside move was triggered by the Bangko Sentral ng Pilipinas' hawkish 25-basis-point rate hike to 4.5%, aimed at curbing inflation driven by rising oil prices. Global headwinds, including disruptions along the Strait of Hormuz, are also fueling volatility in crude benchmarks Brent and WTI.
2TradeAsia noted capital flows are rotating into defensive plays, particularly upstream and downstream oil infrastructure, as energy assets become key cash flow anchors.
Trading volume remained thin, with average daily turnover falling to P5.16 billion. Foreign investors stayed net sellers, with outflows of about P496 million. Market breadth was negative: decliners outnumbered advancers 102 to 92.
Financials and property sectors led the decline, dropping 3.4% and 1.95%, respectively, even as some sectors posted modest gains. The brokerage warned that tighter financial conditions could persist through 2027, as the BSP's rate hike effectively ends its easing cycle.
Inflation risks remain elevated due to potential El Niño impacts on food supply and higher utility costs.