Stock Market Weekly: Headwinds up ahead

WHAT HAPPENED LAST WEEK

The Philippine Stock Exchange index (PSEi) fell by 3.79% week-on-week (w/w) (-237.37 points), closing at 6,027.12 after five consecutive days of losses. Early in the week, corruption concerns and rising oil prices weighed on the index. Sentiment deteriorated further as the peso depreciated following news of the national government’s budget deficit widening to PHP 84.8 billion in August 2025 (July 2025: -PHP 18.9 billion; August 2024: -PHP 54.2 billion), pushing the exchange rate above 58.0 for the first time since July 31, 2025.

On the international front, US macroeconomic data created uncertainty on the Federal Reserve’s policy rate direction, with US 2Q 2025 GDP revised sharply upward to 3.8% (from 3.3%) and inflation rising slightly to 2.7% in August 2025 (from 2.6% in July 2025). US President Donald Trump also announced new tariffs on pharmaceutical products, heavy trucks, and furniture (effective October 1, 2025), adding to global risk-off sentiment.

WHAT TO EXPECT THIS WEEK

This week, we expect the PSEi to trade sideways with a slight downward bias. Locally, the expected release of the implementing rules and regulations of the Konektadong Pinoy Act on October 2, 2025, may weigh on stocks in the telco sector. Investors may also take caution ahead of key developments overseas, including the effectivity of additional US tariffs on Wednesday and US employment data on Friday, which is expected to provide more clarity on further easing from the Fed. Nonetheless, the downside may be capped as investors hunt for bargains amid month-end portfolio rebalancing activities.

Resistance: 6,100/6,200

Support: 5,800/6,000

ANALYSIS

The PSEi slipped by 3.79% w/w to close at 6,027.12 (-237.37 points), reversing last week’s gain. After failing to break above 6,200, the main index further slipped, ultimately dropping near the key support at 6,000. Overall sentiment remains cautious, but there may be a technical rebound if the 6,000 level holds.

STOCK CALLS FOR THE WEEK

RL Commercial REIT, Inc. (RCR) | BUY | FMS TARGET PRICE: PHP 8.20

RCR has consistently posted higher highs in recent months, climbing 42% year-to-date on the back of strong fundamentals. While the broader uptrend remains intact, the stock is undergoing a short-term correction after slipping below its 20-day MA (8.06) following the block sale. Nonetheless, we see pullbacks as opportunities for accumulation, presenting higher upside relative to our fundamental target price.

Accumulating RCR at current levels (PHP 7.70–7.60) is advised. Take profits at PHP 8.20 and set a stop-loss limit at PHP 7.14.

Converge ICT Solutions, Inc. (CNVRG) | BUY ON BREAKOUT | CONSENSUS TARGET PRICE: PHP 14.45

CNVRG is now trading below key long-term moving averages (50-day, 100-day, and 200-day) after breaking below its channel, declining by nearly 50% from its 52-week high of PHP 21.70. It is currently forming a continuation pennant, signaling a potential retest of its recent low. However, a break above this may signal a recovery. Thus, we advise accumulating once CNVRG breaks above the pattern.

Accumulate CNVRG once it breaks from its pennant pattern at PHP 12.50. Take profits at PHP 14.45 and set stop-loss limit below PHP 11.50.

Ayala Corp. (AC) | BUY ON BREAKOUT | CONSENSUS TARGET PRICE: PHP 627.00

AC had been consolidating since December 2024, trading sideways within a defined range. This breakdown indicates selling pressure has overtaken buying interest, with momentum indicators also suggesting the potential for further declines. For investors looking to accumulate, it is advisable to wait for the stock to break above PHP 545, the immediate resistance below the 23.6% retracement level.

Accumulating AC once it breaks above PHP 545 is advisable. Take profits at PHP 627 and set a stop-loss limit below PHP 500.

KEY DATA RELEASES

1. PH Producers’ Price Index (PPI) year-on-year (y/y) for August 2025 on Monday, September 29, 2025 (previous: -0.27%)

2. PH Balance of Trade for August 2025 on Tuesday, September 30, 2025 (previous: -USD 4.05 billion)

3. PH Imports and Exports y/y for August 2025 on Tuesday, September 30, 2025

4. PH S&P Global Manufacturing Purchasing Managers’ Index (PMI) for September 2025 on Wednesday, October 1, 2025 (previous: 50.8)

5. US S&P Global Manufacturing PMI (Final) for September 2025 on Wednesday, October 1, 2025 (previous: 53.0; estimates: 52.0)

6. US Non-Farm Payrolls for September 2025 on Friday, October 3, 2025 (previous: 22k; estimates: 39k)

(First Metro Securities Disclaimer: We obtain our information from sources we believe are accurate and reliable, but we cannot guarantee its completeness or accuracy. Our content consists of opinions, not investment recommendations, and you should perform your own research before making any investment decisions. First Metro Securities is not liable for any losses or damages resulting from the use of this information.)

(Metrobank Disclaimer: This is general investment information only and does not constitute an offer or guarantee, with all investment decisions made at your own risk. The bank takes no responsibility for any potential losses.)