Cautious trading seen with US-Iran talks in focus

PHILIPPINE SHARES may move sideways as investors monitor updates on the US-Iran conflict, with market sentiment to be driven by the outcome of talks between the warring countries.

On Friday, the Philippine Stock Exchange index (PSEi) rose by 0.13% or 8.30 points to close at 6,098.21, while the broader all shares index went down by 0.19% or 6.63 points to end at 3,408.53.

This was the PSEi’s best close in nearly a month or since it ended at 6,113.58 on March 12.

Week on week, the bellwether index went up by 99.53 points from its April 1 finish of 5,998.68.

“Local equities regained their poise above the 6,000 psychological zone, as the US-Iran two-week ceasefire triggered a sharp decline in oil prices, soothing inflation concerns,” 2TradeAsia.com said in a note.

“The ceasefire between the US and Iran sparked optimism in the local market, causing it to rise further last week. In the process, the market was able to get back above the 6,000 level,” Philstocks Financial, Inc. Research Manager Japhet Louis O. Tantiangco said in a Viber message.

For this week, developments in the Middle East will continue to be the main sentiment driver, he said.

“Progressing negotiations and signs that a deal would be reached is expected to lift the market further. If the situation regresses, however, the local market is expected to decline. Overall, investors are still advised to be cautious as the US-Iran ceasefire is deemed fragile.”

He said technical indicators point to a cautiously bullish outlook, adding that progress in the talks could help the PSEi retest its 6,150 resistance line.

“The global macroeconomic landscape remains tethered to the fragile stability of the Middle East. While a ceasefire between the US and Iran has officially commenced, shipping through the Strait of Hormuz from past days’ data remains a mere trickle… Near-term projections suggest the fuel crisis may worsen before it improves,” 2TradeAsia.com added. “While market cycles suggest a recovery is inevitable, the immediate path is rocky and likely to get worse before it gets better.”

It placed the PSEi’s immediate support at 5,800, resistance at 6,050, and secondary resistance at 6,300.

The US and Iran failed to reach an agreement to end their war despite lengthy talks that concluded on Sunday in the Pakistani capital Islamabad, jeopardizing a fragile ceasefire, Reuters reported.

Each side blamed the other for the failure of the 21-hour-long negotiations to end fighting that has killed thousands and sent global oil prices soaring since it began over six weeks ago.

Iran’s semi-official Tasnim news agency said that “excessive” US demands had hindered reaching an agreement. Other Iranian media said there was agreement on a number of issues but that the Strait of Hormuz and Iran’s nuclear program were the main points of difference.

The two sides agreed on Tuesday to a two-week ceasefire in an attempt to wind down a war that began on Feb. 28 with air strikes by the US and Israel on Iran. — Alexandria Grace C. Magno with Reuters