Risk-off may persist as PH stocks test lower ground—brokerage

With a “risk-off” environment expected to endure, Philippine equities may remain under pressure this week as geopolitical tensions and elevated oil prices continue to weigh on investor sentiment.

The PSE Composite Index (PSEi) could test lower support levels near 5,800 as investors turn cautious amid inflation risks and global uncertainty.

In its latest outlook, brokerage 2TradeAsia said resistance levels are seen at 6,050 and 6,300 following recent market weakness.

“Sentiment was locked on headlines in the Middle East,” 2TradeAsia said—noting the rising oil prices and tensions in the region have clouded the outlook.

Last week, the PSEi fell 45 points or 0.76 percent to 5,972, slipping below the key 6,000 level as markets reacted to Middle East developments and a "more hawkish" Bangko Sentral ng Pilipinas (BSP).

Meanwhile, the firm warned that the ongoing US-Iran conflict could sustain the “risk-off” mood, fueling inflation expectations and disrupting global supply chains.

“[We’re] on the lookout for developments regarding Trump’s extension of the peace plan,” said Ron Acoba, chief investment strategist at Trading Edge Consultancy.

Acoba said trading may remain subdued as investors stay on the sidelines, with many market participants expected to take a break during Holy Week.

2TradeAsia also warned of “forced demand destruction” in the Philippines as higher energy costs curb consumption.

It said while potential government measures such as tax adjustments may provide some relief, these may not be enough to offset inflationary pressures.

The brokerage advised investors to remain selective and focus on companies with strong pricing power and resilient balance sheets.

Such firms, it said, are better positioned to navigate higher costs and weaker demand in a prolonged risk-off environment.