Market to remain lackluster this week

The local stock market is seen to witness another sluggish period this week as concerns over the rising number of COVID-19 cases, as well as slower vaccination efforts, continue to persist.

The Philippine Stock Exchange Composite index (PSEi) declined for the fourth straight week, closing 112.16 points or 1.8 percent lower last Friday.

According to Rizal Commercial Banking Corp.’s Michael Ricafort, the next support level is seen at 6,100 to 6,200, while the immediate resistance is at 6,400 to 6,500 levels.

Since the start of May, the PSEi already declined by 1.8 percent as inflation remained relatively elevated and businesses continued to worry about the quarantine restrictions and the COVID-19 cases in the country, Ricafort said.

“Inflation, though slower than market expectations and steady at 4.5 percent in April, remains relatively elevated among two-year highs amid low base/denominator effects in view of the anniversary of the hard lockdowns and stay-at-home orders locally and worldwide, and the resulting record low global oil prices on April 22, 2020,” he said.

Some economic managers are proposing the further re-opening of the economy, especially reverting NCR Plus back to GCQ, which will allow greater operating capacity for many businesses/industries, thereby fundamentally leading to higher production, sales, net income and valuations.

Ricafort said investors would continue to look for more positive signs in the economy before going back to the market more actively.

In particular, they will be monitoring the arrival of COVID-19 vaccines in the second half.