STOCKS are likely to rally when trading resumes on Friday after the holiday as investors carefully assess risks amid a fragile deal between the United States and Iran.
On Wednesday, the Philippine Stock Exchange (PSEi) index rose 2.21% or 132.04 points to close at 6,089.91, while the broad index of all shares rose 1.94% or 65 points to end at 3,415.16.
This was nearly a one-month high for the PSEi as the market joined a global rally after the US and Iran agreed to a temporary ceasefire.
Analyst of F. Yap Securities Investment Marky Carunungan said Wednesday’s rally was motivated by easing tensions, but said the gains may be limited.
“Since the benefits have been front-loaded and the ceasefire is still temporary, we expect the market to rally when trading starts on Friday, and then there will be more options,” he said in a Viber message.
Any signs of a resurgence in volatility could wipe out gains and send markets back into risk-off mode, he added.
Head of Sales Regina Capital Development Corp. Luis A. Limlingan also said that the Philippine market will take its cue from “whatever happens in the two-week ceasefire talks.”
Asian stock markets were buoyant on Thursday as cracks began to appear quickly in the fragile Gulf accord, pushing down oil prices and reminding investors that inflation is here to stay, Reuters reported.
Worse, there was little sign that the Strait of Hormuz was open in any meaningful way, with Iran changing its control over the vital oil pipeline and demanding tolls for safe passage.
President Donald J. Trump took to social media to announce that US troops will remain in the Gulf until an agreement is reached and followed, otherwise the shooting will resume. Meanwhile, Israel carried out its heaviest strike in Lebanon since the war with Iran-backed Hezbollah fighters began last month, killing more than 250 people on Wednesday.
As a result, US crude futures jumped 3.1% to $97.33 a barrel while Brent rose 2.1% to $96.86.
At midday, Japan’s Nikkei dipped on both sides of the flat, after jumping 5.4% in the previous session. South Korea fell 0.4%, following a 6.8% jump.
China’s green chips fell 0.6%, while MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.7%.
On Wall Street, S&P 500 futures and Nasdaq futures were both off 0.2% as Wednesday’s surge intensified.
In mixed Europe, EUROXX 50 futures fell 0.1%, while DAX futures fell 0.5% and FTSE futures rose 0.4%.
With oil prices still 40% higher than pre-conflict levels, rising inflation will be reflected in strong global data. – AGC Magno with Reuters
