Stocks on edge as variants a threat

MANILA, Philippines — As US markets turn their attention toward corporate earnings this week, the local bourse along with the rest of Asia will likely keep track of developments on the virus front as the resurgence of cases may lead to a slower economic recovery.

Investors continue to gauge the potential impact from COVID-19 variants, particularly the highly contagious Delta variant, as governments in some countries reimpose lockdowns and travel restrictions.

The problem has been particularly bad in Asia and Oceania, where countries that largely avoided the earlier outbreaks are now dealing with quickly growing case-loads of their own.

After briefly flirting above the 7,000 level, the benchmark Philippine Stock Exchange index (PSEi) succumbed to profit taking last week.

For this week, analysts expect the index to test its immediate minor support at the 6,600 to 6,700 levels, which would help maintain the underlying strong momentum over the past month.

Michael Ricafort, chief economist at  Rizal Commercial Banking Corp., said the immediate major support, on the other hand, will hover from 6,450 to 6,570 levels.

He said the immediate major resistance, which could serve as the gateway prior to further upside potential, is at the 6,920 to 7,000 levels.

Last week, the PSEi slid for four straight days to close at 6,834.92 on Friday, hitting a new two-week low.

Ricafort said that for the coming weeks, investors would still be keeping a close watch on the progress of COVID-19 cases in the country.