Stocks may  consolidate at 7,000 level

MANILA, Philippines — After a four-day run up last week, local stocks are expected to consolidate at the 7,000 level as the Russia-Ukraine conflict drags on.

The benchmark Philippine Stock Exchange index (PSEi) last week advanced for four straight days to close at 7,124.84 on Friday.

It reached a new one-week high after declining for two straight weeks, gaining by 1.7 percent after the previous week’s decline of 1.5 percent.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said the PSEi gained amid improvements in the US market, with the latest gains  among one- to 1.5-month highs after jobs data showed the lowest initial jobless claims since 1969.

Unicapital Securities Research added that substantial selling pressures driven by the US Federal Reserve rate hikes normalized, allowing the market to consolidate just slightly above the 7,000 support level.

But it added the consolidation at the current support level may face selling pressures, with oil prices rebounding as undersupply remains a concern amid the continuing Russia-Ukraine conflict and with EU nations’ latest developments considering the embargo of Russian oil.

On Wall Street, side-by-side declines in US equity and fixed income markets are pushing investors into cash, commodities, and dividend-paying stocks, as geopolitical uncertainty and worries over a hawkish Federal Reserve rock asset prices.

Investors have traditionally counted on a mix of stocks and bonds to blunt declines in their portfolio, with stocks ideally rising amid economic optimism and bonds strengthening during times of uncertainty.

That strategy can go awry, however, and market gyrations stemming from Russia’s invasion of Ukraine, soaring commodity prices, and the Fed’s hawkish tilt have combined to make it harder to follow the playbook this time around.

“We are in a perfect storm right now,” said Katie Nixon, chief investment officer for Northern Trust Wealth Management. “We’ve been in periods of heightened geopolitical risk before, but this one feels a little different. The negative outcomes could be much more severe and broad.”