Sideways trading seen amid Middle East tensions

MANILA, Philippines — The local stock market is likely to trade sideways once again this week as investors are expected to remain cautious amid ongoing tensions in the Middle East.

The Philippine Stock Exchange Index (PSEi) finished in positive territory last Friday at 6,395.59, up by 0.29 percent week-on-week.

Reyes Tacandong & Co. senior adviser Jonathan Ravelas said the PSEI moved sideways last week as buying momentum waned anew following renewed geopolitical risks.

He said the market is expected to continue moving sideways within the 6,000 to 6,500 levels in the near-term.

For her part, First Metro Investment Corp. head of research Cristina Ulang said profit-taking is seen ensuing as investors hedge versus fallout of latest military conflict in Middle East, causing oil prices to spike.

“A further escalation of such is expected to drive oil prices higher. This in turn may derail our country’s efforts against inflation. Pricing this in would be negative for the market,” Philstocks Financial research manager Japhet Tantiangco said.

He said that investors are also expected to watch out for the Bangko Sentral ng Pilipinas (BSP)’s policy meeting this week on top of developments abroad.

“More than the interest rate decision, investors are expected to watch out for clues on the BSP’s policy direction. Hints of more policy easing in the latter part of this year from the BSP may give sentiment a boost,” he said.

Aside from the BSP’s next interest rate decision on June 19, meanwhile, Unicapital Securities head of research Wendy Estacio-Cruz said the market is also looking forward to April cash remittances data on June 17.

For this week, Estacio-Cruz sees the benchmark index to trade within 6,300 to 6,500 range.

“We expect cautious trading early in the week, heading into the Fed meeting on June 18 and the BSP meeting on June 19. After that, market will be driven by the decisions made by the two central banks,” AP Securities research head Alfred Benjamin Garcia said.