Volatility will continue to rise in rates, inflation fears
EQUITIES could continue to remain volatile this week amid fears of rising rates due to rising inflation, lockdown in China and war in Ukraine.
The benchmark Philippine Stock Exchange Index (PSEi) fell 178.20 points or 2.57% to close at 6,731.25 on Friday, while the broader all-stock index fell 72, 34 points or 1.96% at 3,605.14.
Week over week, the PSEi is down 267.34 points from its close of 6,998.59 on April 22.
Trading is expected to remain volatile this week, analysts say. Last week, the PSEi tipped on oil price moves, the lockdown in China and hawkish comments from the Bangko Sentral ng Pilipinas.
Diversified Securities, Inc. stock trader Aniceto K. Pangan said in a text message that the market will remain volatile on fears of rate hikes amid inflation concerns exacerbated by “supply constraints due to the pandemic…, the Ukraine-Russia war and the China lockdown.”
“Some shutdowns in China, which is the world’s second largest economy, could slow the prospects for economic recovery and worsen some disruptions in global supply chains, which could also lead to higher inflation,” Michael said. L. Ricafort, chief economist of Rizal Commercial Banking Corp. said in an email.
“The continuation of the Russian-Ukrainian conflict for more than 2 months could already aggravate inflationary pressures in the context of the resulting global increase in the prices of oil, energy and other raw materials,” added Mr. Ricafort.
On Sunday, mainland China reported 8,329 new confirmed cases of coronavirus disease 2019 for April 30, Reuters reported.
Health authorities said on Saturday there were nearly 16,000 cordoned off areas in Shanghai, with more than 4 million people barred from leaving their homes. A further 5.4 million people were prevented from leaving their compounds.
Meanwhile, Russia launched missile strikes in southern and eastern Ukraine on Saturday, Ukrainian officials said, and women and children were evacuated from a steel mill in the besieged city of Mariupol after sheltering there for more than a week.
Moscow has focused on southern and eastern Ukraine after failing to capture the capital Kyiv in a nine-week assault that razed cities, killed thousands of civilians and forced more than 5 million people to flee abroad.
At home, the national elections to be held on May 9 will continue to affect trade.
“The final week of the national and local campaign could lead to increased election-related spending, thereby boosting economic and business activity and could also benefit some listed companies in terms of sales, net income and valuations,” said Mr Ricafort.
He placed immediate support for PSEi this week at the 6,600-6,700 levels and resistance at 6,940-6,990.
Meanwhile, Diversified Securities’ Mr. Pangan put immediate support at 6,800 and resistance at 7,100. LMJC Jocson with Reuters