Tariff-related leads are likely to kick off a volatile trade this week amid the approaching April 2 deadline set by US President Donald Trump on his reciprocal tariff threat to partners.
Analysts said that investors are also expected to dissect the March inflation data set for release Friday.
Last Friday, the Philippine Stock Exchange index (PSEi) closed the week at 6,147.44, down 1.9 percent from the prior week’s 6,266.75.
This sent the benchmark index down by 5.8 percent on a year-to-date basis, ending 2024 at 6,528.79.
Juan Paolo Colet, managing director at China Bank Capital Corp., said the local stock market’s slide last week was driven by anxiety over Trump’s “big announcement of reciprocal tariffs slated for April 2.”
“Many investors have exited or trimmed positions to hedge their downside risk in case the tariffs are as bad or worse than expected,” Colet said. “It’s hard to say how much of the potential impact the market has already discounted, but the risks have not been fully priced in as of last Friday. At this point, it’s best to be prepared for volatility,” he said.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC), noted that as of last week, Trump had already announced imposing a 25 percent tariff on all cars not made in the US starting April 2, on top of what he promised to impose on that same day.
“Any new tariff announcement from the US government is expected to pull the local bourse lower,” said Japhet Tantiangco, analyst at Philstocks Financial Inc.
“In line with this, investors are expected to watch out for the implementation of the US’ upcoming reciprocal tariffs to see if there will be any adjustments,” he added.
Alfred Benjamin Garcia, head of equity research at AP Securities Inc., meanwhile, noted that the Federal Reserve’s preferred inflation measure—the US core personal consumption expenditure (PCE) price index—released late Friday showed an uptick in February at 2.8 percent compared to the consensus forecast of 2.7 percent.
It will likely be priced into local trades Monday, he said.
“We also have the March inflation on Friday, critical data points for the BSP’s (Bangko Sentral ng Pilipinas) interest rates decision when they meet on April 10,” he added.
Online stock trading platform 2tradeasia.com, on the other hand, noted that the US’s escalation in the tariff war has already led to significant real-world impacts between the US and the concerned economies, like the reported erosion in volumes borne from the implemented tariffs on Canada.
“This has been the expected impact, as also taught by seasoned market participants — in the days where it was just US and China circa 2018 — but nevertheless sentiment-negative and just complicates the opaqueness of long-term fundamentals, specifically inflation,” it said.
2tradasia.com said developments in this space could direct the direction of investment flows in the near term.
“As first quarter officially comes to a ‘close, the upcoming earnings season should provide critical insights–especially following outperformance in fourth-quarter earnings,” it also said.
The online stock trading platform said investors should maintain selective buying as “potential consumption bump and traffic activity from the midterm elections may provide some second wind to cyclical.”
“This is further underpinned by the current level of valuations, where the low entry point allows more risk accommodation. We note that the upcoming Q2 (summer, elections) should seasonally have elevated domestic inflation drivers; tighter risk management and balancing act should be in place to remediate further event risks,” it added.
