Stock Market Weekly: Lack of catalysts, ongoing tariff negotiations

WHAT HAPPENED LAST WEEK

The Philippine Stock Exchange index (PSEi) ended last week higher by 1.01% week-on-week (w/w), gaining 64.31 points to close at 6,459.88. The market began with a three-day winning streak, supported by positive May 2025 employment figures showing Philippine unemployment easing to 3.9% (April 2025: 4.1%; May 2024: 4.1%).

Momentum accelerated mid-week as investors sought bargains ahead of anticipated announcements from the US. However, sentiment turned cautious on Thursday after the US announced a higher proposed tariff rate for the Philippines at 20% (from 17%, effective August 1, 2025), while the US Federal Reserve’s FOMC minutes dampened hopes for a rate cut this month. Renewed caution prompted profit-taking as the week ended, erasing some of the earlier gains.

WHAT TO EXPECT THIS WEEK

This week, we expect the PSEi to trade sideways with a downward bias. Amid the lack of fresh local catalysts, the market is likely to take cues from the foreign front. Consensus forecasts higher US inflation at 2.6% for June 2025 (from 2.4% in May 2025), which may further cloud the outlook for Fed rate cuts.

Additionally, US President Donald Trump recently announced 30% tariffs on the European Union and Mexico (effective August 1, 2025) – two of the country’s largest trading partners – reigniting fears of a global trade slowdown. Nonetheless, the downside may be capped if US inflation data is better than expected, or if more favorable trade deals emerge.

Locally, investor confidence could improve if negotiations are successful, as a Philippine delegation is set to visit the US this week, ahead of the scheduled meeting between President Ferdinand Marcos Jr. and US President Donald Trump on July 22, 2025.

ANALYSIS

The PSEi climbed 1.01% w/w to 6,459.88 (+64.31 points), maintaining its momentum above the 20-day, 50-day, and 100-day moving averages (MA), supported by rising volume and improving indicators. The index attempted to breach the 200-day MA but faced resistance near 6,550, which resulted in a mild pullback. A sustained break above 6,600 could trigger a stronger rally, while failure to do so may lead to sideways consolidation toward support at 6,400.

Resistance: 6,600

Support: 6,400

STOCK CALLS FOR THE WEEK

Filinvest REIT Corp. (FILRT) | BUY | CONSENSUS TARGET PRICE: PHP 3.65

FILRT has recently broken out of its consolidation pattern, trading above key moving averages (50-day, 100-day, and 200-day). Momentum indicators are also trending upwards, signaling a high probability for a sustainable rally to emerge. At current levels, the counter is retesting its recent breakout level, offering a favorable entry point. Thus, we believe that accumulating at current levels is advisable.

Accumulating at current levels around PHP 3.32 is advised. Take profits around PHP 3.81 and set stop loss limits at PHP 3.05.

DigiPlus Interactive Corp. (PLUS) | TRAILING STOPS | CONSENSUS TARGET PRICE: PHP 78.78

In our recent report, “Index entry secured”, we highlighted that PLUS has secured a spot in the PSEi this coming August 2025 rebalancing. While a slight rebound may occur near the rebalancing date, we expect the downturn to resume given the government’s ongoing regulatory review, especially as competition intensifies. Even if a total ban is not implemented, we still anticipate a significant decline in revenue under stricter regulation.

Implementing trailing stops to protect gains and manage risk is advisable.

MREIT, Inc. (MREIT) | BUY ON SUPPORT | FMSEC TARGET PRICE: PHP 15.10

MREIT is currently on a pullback after its recent rally and breakout above the PHP 13.80 level. It is currently trading above all key moving averages (MAs) (20-day, 50-day, 100-day, and 200-day), indicating bullish sentiment. However, momentum indicators suggest the pullback might persist with the MACD approaching the signal line and the RSI trending lower after reaching the overbought zone.

Accumulating MREIT once it reaches its support level at PHP 13.80 is advisable. Take profits around PHP 15.87 and set stop loss limits at PHP 12.70.

KEY DATA RELEASES

1. US CPI year-on-year (y/y) for June 2025 on Tuesday, July 15, 2025 (previous: 2.4%; estimates: 2.6%)

2. US PPI y/y for June 2025 on Wednesday, July 16, 2025 (previous: 2.6%; estimates: 2.5%)

3. PH Cash Remittances for May 2025 on Wednesday, July 16, 2025 (previous: USD 2.7 billion)

4. US Retail Sales y/y for June 2025 on Thursday, July 17, 2025 (previous: 3.3%; estimates: 3.6%)

5. US Initial Jobless Claims as of July 12, 2025, on Thursday, July 17, 2025 (previous: 227k; estimates: 233k)

6. PH Balance of Payments for June 2025 on Friday, July 18, 2025 (previous: -USD 298 million)