PSEi may follow Wall St lead

MANILA, Philippines — Local stocks may follow Wall Street’s lead this week, but a strong rally remains a thorny question in a market that still faces its share of risks – chief among them the hawkish rate hike path the US Federal Reserve unveiled on Wednesday and geopolitical uncertainty over Russia’s invasion of Ukraine.

Wall Street stormed back last week after absorbing a long-awaited rate hike from the Fed, leaving investors to determine whether stocks are set for a sustained rebound or more turbulence.

Investors cheered increased clarity on monetary policy and an encouraging assessment of the US economy from the Fed.

In contrast, the Philippine Stock Exchange index (PSEi) eased last Friday after climbing for three straight days, declining by 114.82 points or 1.6 percent to close at 7,007.63, still among two-month lows .

The PSEi fell to its lowest level in over six months to close at 6,816.95 at the start of the week.

For the week, the PSEi declined by 104.56 points or 1.5 percent after the prior week’s decline of 3.1 percent.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said the main index could be supported at the 6,800 to 6,900 levels, which help keep intact the underlying upward trend over the past seven months.

He said Friday’s drop came after global oil prices went up to over $100 per barrel anew from the lows posted earlier during the week, which in turn was triggered after the US Pentagon assessed that Russia could make threats to use nuclear weapons if resistance by Ukraine continues and amid mixed signals on Russia-Ukraine diplomatic talks.

Ricafort said factors that affected the market last week included the developments related to the conflict between Russia and Ukraine, and on the domestic front, new COVID-19 local daily cases, which eased to new 2.5-month lows or at below 1,000 levels.

Moving forward, he said, this week’s catalysts include developments surrounding the Russia-Ukraine conflict and progress on priority reform measures in Congress such as the Amendments to the Foreign Investment Act, already signed into law by President Duterte, the Public Service Act, already approved by Congress and now for signing into law, and the Regional Comprehensive Economic Partnership (RCEP) ratification, among others.