Index upside points to 7,000 level

The benchmark Philippine Stock Exchange index (PSEi) could retest the 6,700 resistance this week and break toward 7,000 in the near-term, analysts said.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said the PSEi’s immediate major support is seen at 6,215 to 6,310 while the next resistance is at 6,600.

This could lead to a potential re-test of the 6,700 levels, particularly the high of 6,698.41 posted on July 25, 2003, he said.

He added this is the next important gateway to further upside potential toward the 7,000 levels in the coming weeks or months.

Last week, the PSEi fell by 139 points or 2.1 percent to 6,503, as all sectoral gauges were down.

Mining and oil tumbled by 3.14 percent; property was down by 2.60 percent and holdings shed 2.17 percent, according to data from the Philippine Stock Exchange (PSE).

Average market turnover, meanwhile, eased to P5.99 billion, down by 7.90 percent week on week, while foreigners turned net sellers to P99 million on average from P529 million net buying last week. Decliners were ahead against gainers, 95 to 85.

Ricafort said the market had been declining after global crude oil prices hovered among three-week highs recently amid increased tensions at the Red Sea.

The situation could lead to higher shipping costs and some shipping delays in the Asia-Europe international shipping route due to longer route around Africa, instead of the short cut through Suez Canal via the Red Sea.

Signals from the US Federal Reserve also affected sentiment.

“The PSEi also corrected lower after more cautious and less dovish statements from some Fed officials recently, amid mostly stronger-than-expected US economic data recently that partly reduced the chances of Fed rate cuts,” Ricafort said.

As a result, the benchmark 10-year US Treasury yield went up to one-month highs at 4.12 percent, which also partly supported the upward correction of the US dollar versus major world currencies recently.

China’s softer economic growth also affected market sentiment, Ricafort said.

The world’s largest economy posted the slowest economic growth in more than 30 years, at 5.2 percent in 2023.

Locally, the PSEi also corrected lower after PAGASA, the state-owned weather bureau, recently signaled that a strong El Niño is ongoing and could last until February.

“This could reduce rainfall and agricultural production, especially rice, and could lead to some pick up in food prices and overall inflation,” Ricafort said.