PSEi may continue dip as Middle East war drags on

By Alexandria Grace C. Magno, Reporter

PHILIPPINE SHARES are likely to trend lower this week as investors weigh the impact of escalating Middle East tensions and rising oil prices on the domestic economy.

Philstocks Financial Research Manager Japhet Louis O. Tantiangco said the market’s focus this week would remain on developments in the Middle East, with investor sentiment closely tied to any signs of de-escalation.

“Clear signals that the conflict is nearing its end are expected to boost investors sentiment,” he said in a Viber message. In the absence of such, the bourse will likely remain under pressure.

Oil markets added to the stress. Brent crude settled above $100 per barrel for the first time since August 2022, rising 2.67% to $103.14, while West Texas Intermediate rose 3.11% to $98.71.

Analysts said higher oil prices could exacerbate inflationary pressures in the Philippines, a major importer of energy, and dampen economic growth.

The Philippine Stock Exchange index (PSEi) closed last week at 6,058.94, down 0.89% or 54.64 points, while the broader all-share index ended at 3,382.11, sliding 0.68% or 23.29 points. Over the week, the PSEi lost 261.47 points from its March 6 finish of 6,320.41.

“The local market lost 261 points to 6,058 last week, as soaring global oil prices and heightened geopolitical risks triggered broad-based sell-offs,” 2TradeAsia.com said in a note to clients.

Investor sentiment was battered by the war involving the US, Israel and Iran. On Monday, the PSEi plunged 4.97% or 314.19 points to 6,006.22, its biggest single-day decline since April 16, 2020, and its lowest close in almost three months.

The index had opened the session at 6,198.45 and fell to an intraday low of 5,938.39 before recovering above 6,000.

Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said higher energy costs could slow the economy and push consumer prices higher, while a weak peso further squeezes households and corporate margins.

Technical indicators also point to continued market caution. Mr. Tantiangco said the PSEi has broken below its 200-day exponential moving average and the 6,150 level, suggesting sustained bearish momentum.

The index’s moving average convergence/divergence (MACD) and 14-day relative strength index show a downward trend. “The market’s trading range is now seen from 6,000 to 6,150,” he said.

Market watchers also highlighted limited policy space for the Bangko Sentral ng Pilipinas to cut interest rates, given that inflation could exceed 4% amid the oil shock and peso weakness.

Any rebound above 6,500 in the PSEi, analysts said, would likely depend on a meaningful geopolitical de-escalation or stronger fiscal measures than temporary excise tax cuts.

With uncertainty surrounding the conflict and global oil markets, Philippine equities are expected to remain under pressure this week, as investors weigh the twin risks of rising costs and slowing growth.