PSEi may weaken anew this week

MANILA, Philippines — The stock market may continue to weaken this week as the continued spike in COVID-19 cases is affecting prospects for a better economic recovery, according to Michael Ricafort, chief economist at Yuchengco-owned Rizal Commercial Banking Corp. (RCBC).

Immediate major support for the Philippine Stock Exchange index (PSEi) may hover at 5,750 to 5,850 range.

“Immediate resistance is at the 6,000 to 6,150 levels, which is a gateway prior to any further upward correction,” he said.

Major upcoming leads include the latest government decision to maintain general community quarantine for Metro Manila up to mid-August 2020.

This, he said, could be a relief and better than some market expectations about risks of being reverted back to modified or enhanced community quarantine.

“This is in view of the recent spike in new COVID-19 cases toward a total of nearly 100,000 amid the importance of further re-opening the economy that supports economic recovery prospects and valuations amid social-distancing and other stringent health measures,” Ricafort said.

Other leads that can affect the market include the inflation data for July, set to be release on Aug. 5 and economic data set to be released on Aug. 6.

Last week, the PSEi weakened by 37.82 points, or 0.6 percent, to close at 5,928.45 on July 30.

The PSEi already declined for the fourth straight week, down for the sixth week in seven weeks, by 74.81 points or 1.25 percent.

Ricafort said that since the start of 2020, the PSEi already declined by a total of 1,886.81 points or 24.1 percent versus the closing level of 7,815.26 in 2019.

This, he said, may already reflect some market expectations about similar declines in net income of some listed companies largely due to the COVID-19 lockdowns and the pandemic.