Selling pressure may persist at PSE

MANILA, Philippines — Selling pressure may continue to affect the local stock market as investors digest the weakening of the peso against the dollar and following the rebound rally.

Commenting on last week’s performance, Unicapital Securities said “the  week’s performance so far snaps a  three-week long decline as bargain hunting  amid cheap valuations spurred investor sentiment amid the challenging economic landscape.”

In the US, major indexes closed flat after failing to sustain a rebound as markets prepare to close out the worst first half of the year since 1970 amid the possibility of a recession from aggressive monetary tightening.

Last week, the benchmark Philippine Stock Exchange  index (PSEi) corrected slightly higher by 9.92 points or 0.2 percent to close at 6,165.35.

Week-on-week, the PSEi declined for the fourth straight week by 52.21 points or 0.8 percent. Since the start of 2022, the PSEi declined by a total of 957.28 points or 13.4 percent.

Michael Ricafort, chief economist at  Rizal Commercial Banking Corp., said he sees the next support for the index at the 6,000-mark.

Immediate resistance, on the other hand, is at the 6,300 to 6,500 levels.

He also sees the situation in the financial markets to remain similar for as long as the Russia-Ukraine conflict drags on, in terms of relatively elevated global commodity prices and inflation.

Improvements in the global situation would help significantly ease elevated inflation and reduce the aggressiveness of the Fed and other central banks in tightening monetary policy.

This, in turn, would help solve many of the problems and challenges faced by the global economy related to elevated inflation.

Ricafort said this would lead to the recovery in the global financial markets, especially bond and stock markets that experienced selloffs in recent weeks.