The Philippine Stock Exchange index has entered the bear market territory after it plunged by 239.47 points to 6,020.07 on Tuesday, 3.83 percent lower than Monday’s close amid recession fears abroad and negative sentiment at home.
Philstocks Financial, Inc. assistant manager for research and online engagement Claire Alviar pointed out that the growing recession fears pulled the US markets down, while the impact of super typhoon “Karding” and the weakening peso adversely affected Philippine investors.
“Investors were worried about inflation as it may get pressured by the recent typhoon. This may also exacerbate our food supply shortages which may lead to higher inflation,” she added.
The bear market was called because local market prices dropped 20 percent from its peak in February.
However, it should be noted that the market managed to return above the 6,000 psychological support level before it closed. Thus, Alviar said the resistance could clock in at 6,400.
“The weakening resumed with local shares following the equity sell-off stateside on the back of an aggressive Federal Reserve and surging interest rates, which in turn have roiled currency markets,” Regina Capital Development Corp. managing director Luis Limlingan said.
Reversal far-fetched
With Tuesday’s steep drop, Philstocks research manager Japhet Tantiangco said the local market is now brought to a more bargain level, but noted that the “bullish reversal is not yet seen in the near term as lingering economic concerns keep the market’s bias tilted to the downside.”
“Currently, the local market is already at its 6,000 — 6,100 key support. This range could be tested further moving forward. If 6,000 — 6,100 is breached, the next support we see is at 5,700,” he said.