Volatility may persist after ‘wild’ April for market

VOLATILE TRADING is expected to continue this month after a rocky April for the Philippine stock market, analysts said.

On Tuesday, the Philippine Stock Exchange index (PSEi) dropped by 1.02% or 69.15 points from the previous day to end April at 6,700.49, while the broader all shares index went down by 0.48% or 17.34 points to end at 3,525.94.

Month on month, the PSEi declined by 2.9% or 203.04 points from its 6,903.53 close on March 27.

“April saw the year’s first major correction as the market quickly priced in the decreasing probability of interest rate cuts this year as well as the heightened risk of wider geopolitical conflicts,” China Bank Capital Corp. Managing Director Juan Paolo E. Colet said in a Viber message.

“It was also a particularly volatile month, with the index posting its highest and lowest levels since the start of 2024, and for a time, all index gains for the year were erased.”

Iran on April 13 launched more than 300 drones and missiles against Israel, its first direct attack on the country, in retaliation for a suspected Israeli air strike on its embassy compound in Damascus on April 11 that killed elite military officers, Reuters reported.

The month’s worst close was logged on April 16, with the PSEi hitting 6,404.97, lower than the end-2023 finish of 6,450.04, amid fears that the conflict would escalate. Easing tensions have allowed the index to rebound.

“April has been a wild ride. We saw the market attempt to break above 7,000, only to drop back down to 6,400 on geopolitical and inflation concerns. Now we’re halfway back to 7,000 again as first quarter earnings start to trickle in,” AP Securities, Inc. Research Head Alfred Benjamin R. Garcia said in a Viber message.

For this month, “market choppiness” is expected to persist as lingering inflation concerns are expected to keep central banks at home and abroad hawkish, Mr. Colet said.

The US Federal Reserve was set to announce its latest policy decision overnight, with markets expecting it to keep its target rate at 5.25%-5.5% for a sixth straight meeting amid sticky inflation.

The Bangko Sentral ng Pilipinas is expected to follow suit and keep its policy rate at a 17-year high of 6.5% for a fifth straight time at its own meeting on May 16 due to elevated prices of key commodities like rice due to the impact of El Niño.

“Hopefully, the market can sustain the momentum heading into May, although I’m a bit cautious because there’s a saying in the market to sell in May and go away,” Mr. Garcia said.

“Historically, May is not a good month for the stock market, but hopefully we’ll get a stream of good earnings… Based on what we have so far, it looks like this will be a good earnings season,” he added.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort put the PSEi’s major support at 6,360 and major resistance 6,800-6,820. — Revin Mikhael D. Ochave with Reuters