Stock Market Weekly: A bit of optimism this week 

WHAT HAPPENED LAST WEEK

The Philippine Stock Exchange index (PSEi) snapped its five-week winning streak, closing at 6,413.10 (-0.81% week-on-week), as the market navigated a mix of global and local headwinds. Throughout the week, investors digested the following key events and data releases:

(1) Moody’s downgrade of the US credit rating, which spurred a rise in US Treasury yields;

(2) the Philippines’ balance of payments (BoP) deficit widening by 29.9% year-on-year (y/y) to USD 2.56 billion in April 2025 (March 2025: USD 1.97 billion; April 2024: USD 639 million); and

(3) President Ferdinand Marcos Jr.’s call for courtesy resignations from cabinet members and state economic managers as part of a “bold government reset.”

Despite the cautious backdrop, the market found support late in the week as local investors scooped up oversold heavyweights across key sectors.

WHAT TO EXPECT THIS WEEK

This week, we expect the market to trade sideways with a slight upward bias as sentiment is likely to improve. Initially, US President Donald Trump’s threat of a 50% tariff on European Union (EU) goods starting June 1, 2025, and a 25% levy on imported iPhones raised concerns of renewed trade tensions that had recently shown signs of easing. However, both the US and EU agreed to delay implementation until July 9, 2025, to allow more time for negotiations, offering a temporary reprieve that may help ease market jitters in the near term.

Meanwhile, geopolitical tensions may escalate further, with ongoing developments in the Russia-Ukraine conflict likely to dampen sentiment. On the data front, investors will be closely monitoring the second reading of US 1Q GDP and Core PCE Price Index releases, which could influence expectations for the US Federal Reserve’s upcoming policy decisions. Locally, April trade figures, bank lending, and money supply data are scheduled for release, while the MSCI quarterly rebalancing may trigger increased volume and volatility toward the end of the week.

Resistance: 6,500 / 6,600

Support: 6,200 / 6,300

ANALYSIS

The PSEi slipped 0.81% w/w to 6,413.10 (-52.43 points), managing to reclaim the 6,400 level after briefly dipping below it during the week. With the index still struggling to break past the 6,500 resistance, a retest of the 6,300 support remains possible, potentially offering an attractive re-entry opportunity following five consecutive weeks of gains.

STOCK CALLS FOR THE WEEK

Jollibee Foods Corp. (JFC) | BUY | FMSEC TARGET PRICE: PHP 330.00

JFC is trading below its 100-day and 200-day moving averages (MA), indicating long-term bearish sentiment. After hitting a new 52-week low of PHP 203.00 on April 7, 2025, the stock has been on an uptrend, closing above its 20-day MA, with both RSI and MACD near neutral levels.

Therefore, given the risk is skewed towards the upside prior to the rebalancing date, accumulating at current levels is advisable. Set stop-limit orders at PHP 212.00 and take profits at PHP 265.00. For long-term investors, First MetroSec has a fundamental target price of PHP 330.00.

Wilcon Depot Inc. (WLCON) | TRAILING STOPS | FMSEC TARGET PRICE: PHP 9.00

WLCON is trading below its 50-day, 100-day, and 200-day moving averages (MA), indicating long-term bearish sentiment. After hitting a new 52-week low of PHP 5.68 on April 21, 2025, the stock has been consolidating between its 20-day and 50-day MAs, with both RSI and MACD at neutral levels.

To protect against selling pressure prior to the rebalancing date, we suggest implementing trailing stops to protect gains from the unfavorable impacts of index deletion. For long-term investors, we have a fundamental target price of PHP 9.00.

Aboitiz Equity Ventures, Inc. (AEV) | BUY | CONSENSUS TARGET PRICE: PHP 53.20

After enduring a downtrend triggered by its removal from the MSCI Standard Index last year, the stock has since been consolidating, facing a near-term resistance around PHP 35.00. The recent break above this resistance suggests a sustainable uptrend, and investors may consider accumulating on dips ahead of the index changes taking effect to take advantage of upside from the fund flows. Accumulating AEV at current levels is advisable. Take profits at PHP 41.40 and set stop-loss limits at PHP 33.12.

KEY DATA RELEASES

1. PH Budget Balance for April 2025 on Tuesday, May 27, 2025 (previous: PHP-375.7 billion)

2. US GDP Growth Rate quarter-on-quarter for 1Q on Thursday, May 29, 2025 (estimates: -0.3%; previous: -0.3%)

3. PH Balance of Trade for April 2025 on Friday, May 30, 2025 (previous: USD-4.13 billion)

4. PH Imports and Exports y/y for April 2025 on Friday, May 30, 2025

5. PH Bank Lending y/y for April 2025 on Friday, 30 May 2025 (previous: 13.4%)

6. PH Money Supply M3 SRF y/y for April 2025 on Friday, May 30, 2025 (previous: 6.1%)

7. US Core PCE Price Index y/y for April 2025 on Friday, May 30, 2025 (estimates: 2.5%; previous: 2.6%)

8. MSCI Quarterly Rebalancing on Friday, May 30, 2025