PHL shares to consolidate amid fragile ceasefire

STOCKS may consolidate when trading resumes on Friday after a holiday as investors carefully assess risks amid the fragile truce between the United States and Iran.

On Wednesday, the Philippine Stock Exchange index (PSEi) climbed by 2.21% or 132.04 points to close at 6,089.91, while the broader all shares index went up by 1.94% or 65 points to end at 3,415.16.

This was a near one-month high for the PSEi as the market joined a global relief rally after the US and Iran agreed to a temporary ceasefire.

F. Yap Securities Investment Analyst Marky Carunungan said Wednesday’s rally was driven by easing tensions, but he said gains may be limited.

“With gains already frontloaded and the ceasefire still temporary, we expect the market to consolidate when trading resumes on Friday, with upside becoming more selective,” he said in a Viber message.

Any signs of a renewed escalation in the conflict could wipe out gains and shift markets back into risk-off mode, he added.

Regina Capital Development Corp. Head of Sales Luis A. Limlingan likewise said that the Philippine market will take its cue from “any developments from the two-week ceasefire negotiations.”

Asian share markets were in a sober mood on Thursday as cracks quickly began to appear in the fragile Gulf truce, nudging oil prices back up and reminding investors the inflationary fallout would last a long time yet, Reuters reported.

Crucially, there was scant sign that the Strait of Hormuz was open in any meaningful way, with Iran flexing its control over the vital oil artery and demanding tolls for safe passage.

President Donald J. Trump took to social media to declare US forces would remain in the Gulf until a deal was reached and complied with, otherwise the shooting would begin again. Meanwhile, Israel carried out its heaviest strikes on Lebanon since its conflict with Iran-backed Hezbollah militia began last month, killing more than 250 people on Wednesday.

As a result, prices for US crude futures bounced 3.1% to $97.33 a barrel and Brent rose 2.1% to $96.86.

At midday, Japan’s Nikkei dithered either side of flat, after jumping 5.4% the previous session. South Korea dipped 0.4%, following a leap of 6.8%.

Chinese blue chips slipped 0.6%, while MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.7%.

On Wall Street, S&P 500 futures and Nasdaq futures were both off 0.2% as Wednesday’s surge petered out.

For a mixed Europe, EUROSTOXX 50 futures eased 0.1%, while DAX futures fell 0.5% and FTSE futures rose 0.4%.

With oil prices still around 40% higher than pre-conflict, an inflationary spike is about to show up in the hard data across the globe. — A.G.C. Magno with Reuters