MANILA – The Philippine Stock Exchange index (PSEi) ended Monday down still due to correction but the peso sustained its sideways close against the greenback.
The main equities index slipped for the second consecutive trading day after it ended at 6,518.64 points.
All Shares declined by 0.26 percent, or 10.39 points, to 3,988.25 points.
Only the Financials gained during the day after it rose by 0.26 percent.
On the other hand, the Mining and Oil index dropped by 1.32 percent; Industrial, 0.63 percent; Services and Property, both fell by 0.47 percent; and Holding Firms, 0.41 percent.
Volume totaled 2.43 billion shares amounting to PHP5.97 billion.
Decliners led advancers at 120 to 86, while 48 shares were unchanged.
In a reply to e-mailed questions from PNA, Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort attributed the main equities index’s drop to the implementation of the modified enhanced community quarantine (MECQ) in the National Capital Region (NCR) and four nearby provinces namely Bulacan, Laguna, Cavite and Rizal, collectively called NCR Plus, from April 12 to 30.
This came after the NCR bubble was placed under the strictest form of community quarantine, ECQ, from March 29 to April 11 to help address the rising number of coronavirus disease 2019 (Covid-19) infections to record-high levels of more than 15,000 last March.
Ricafort said while the latest quarantine classification in the NCR bubble has been eased, it “could still nevertheless reduce economic/business activities.”
He also cited as a negative factor the delay in the arrival of additional Covid-19 vaccines, which “could have helped in reducing new Covid-19 cases and in the overall economic recovery prospects.”
Ricafort said even with the latest drop in the PSEi, its “immediate major support over the past six months remain strong at 6,400 levels.”
This level, he added, is “defying the ECQ extension in NCR Plus and helping prevent further downward correction towards the 6,000-6,200 levels, which have been strong support levels since 4Q (fourth quarter) 2020.”
He forecasts the main gauge’s immediate resistance level to be around 6,600-6,700 levels “which serve as the next gateways vs. further gains in the near term.”
Meanwhile, the local currency is still on sideways close against the US dollar after finishing the week’s first trading day at 48.56 from 48.54 Thursday last week.
There was no trading last Friday due to the commemoration of the Day of Valor, a national holiday.
The local unit opened the day at 48.56 and traded between 48.585 and 48.53.
Average level for the day stood at 48.564.
Volume totaled USD373 million, lower than the previous session’s USD659.28 million.
Ricafort said placing of the NCR Plus under MECQ is a negative for the peso since “this could somewhat lead to some pick-up in imports with some increase in the capacity allowed for some businesses/industries under MECQ than ECQ.”
Higher importation means greater demand for the US dollar, which will make the peso weaker, he said.
Ricafort said the local unit is also “slightly weaker after some slight increase in the US dollar vs. major global currencies from three-week lows after the latest signals from Federal Reserve Chairman Jerome Powell on stronger US economy and jobs creation while reiterated downplaying inflation risks/dovish signals.”
These factors are, however, countered by the 41.5-percent annual growth in foreign direct investments (FDIs) last January to USD961 million, which Ricafort said is a new one-year high.
Other factors that buoyed the peso include the drop in global oil prices to among its 1.5-month lows and the decline to among two-week lows of the benchmark 10-year US treasury yields, he added.
Ricafort said the peso’s next support level is between 48.30-48.80 while immediate resistance level is between 48.70 and 48.80. (PNA)
