Investors seen keeping an eye on Trump tariffs

INVESTORS will likely continue to trade cautiously this week as they monitor US trade policy developments and await fresh economic data.

The Philippine Stock Exchange Index (PSEi) closed Friday at 6,459.88, up 1.01 percent week-on-week, as reactions to US President Donald Trump’s latest tariff moves, including a 20-percent duty for the Philippines, were more muted compared to earlier in the year.

Year-to-date, however, the benchmark index is still down 1.06 percent.

Despite the week-on-week uptick, analysts warned that lingering tariff threats could keep weighing on sentiment.

“The local market managed to post gains and make technical progress last week. However, the last two trading days showed that tariff threats present downside risks to the bourse,” Philstocks Financial Inc. research manager Japhet Tantiangco said.

The US’ proposed 20 percent tariff on Philippine goods — set to take effect on Aug. 1 — remains a central concern.

“[I]nvestors are expected to watch out for clues on the Philippines’ trade negotiations with the US,” Tantiangco said.

“Signs of progress may help lift the local market. But lack of positive trade talk developments may pull the market lower.”

Tantiangco said the Philippine market remained undervalued and noted that was also now trading above its 200-day exponential moving average.

Online stock brokerage firm 2TradeAsia.com said that for the Philippines, the lower 20-percent duty compared to its neighbors “could paradoxically position it as a more attractive node for supply chain re-configuration.”

However, it also warned that foreign exchange and yield volatility, as well as inflation downside risks, remained elevated.

“The overarching uncertainty of these reciprocal tariff policies, with August 1st serving as the next critical deadline, ensures persistent volatility in global trade flows and obscures long-term earnings visibility,” 2TradeAsia continued.

Local macroeconomic conditions remain favorable, however, relative to regional peers and the brokerage said that financials and banks could benefit from evolving interest rates while infrastructure-related plays may gain from continued government spending.

Consumption-oriented stocks are also seen to have resilient revenue streams, though those with better pricing power amid peso weakness could fare better.

For the week ahead, investors are expected to keep an eye on May overseas Filipino worker remittance data on Tuesday, which may provide further clues on the resilience of domestic consumption — a key pillar of the Philippine economy.

Analysts expect the market to remain sensitive to external headlines, particularly from the US, with trading likely to be shaped by a mix of domestic policy tailwinds and international trade frictions.