Investors seen weighing Trump trade war’s impact

INVESTORS could continue to hunt for bargains this week while considering the impact of a trade war launched by US President Donald Trump, analysts said.

The benchmark Philippine Stock Exchange index (PSEi) fell to an over two-year low of 5,862.59 last Friday, down 6.9 percent week on week and 10.2 percent since the start of 2025.

It shed 666.20 points in January alone and has now fallen for four consecutive months.

Philstocks Financial Inc. research manager Japhet Tantiangco said that “with four straight weeks of decline, we expect bargain hunting to ensue.”

“However, we may not see a complete turnaround yet as sentiment could remain bearish,” he added.

“Investors could still be concerned with how the Philippine economy would be this 2025 following its below target performance last year, and how the BSP (Bangko Sentral ng Pilipinas) can help given that the Fed is slowing down with its policy easing.”

Rizal Commercial Banking Corp. chief economist Michael Ricafort said that US protectionism, which could drive up inflation, would likely lead to fewer rate cuts.

Trump on Saturday announced duties of 25 percent on imports from Canada and Mexico and 10 percent on imports from China, claiming that the three countries needed to do more to curb the flow of narcotics and illegal immigrants.

Canada and Mexico quickly announced retaliatory tariffs, while China said that it would also announce “countermeasures.”

Locally, Unicapital Group research head Wendy Estacio-Cruz said that “investor appetite may remain tepid as the market anticipates the potential impact of trade tariffs on neighboring countries, such as the Philippines.”

The release of inflation data for January this Wednesday could provide a lift as this would provide clues regarding the direction of key interest rates.

Tantiangco said that aside from inflation, investors will also be looking for cues from today’s release of S&P’s Philippines Manufacturing PMI (purchasing managers’ index) for January and November labor market data due Thursday.

“Chartwise, the market’s trading range for now is seen at 5,700 to 6,000,” he said.

Online stock brokerage firm 2TradeAsia.com, meanwhile, said “the 2024 PH GDP (gross domestic product) miss [announced last Thursday]… coincided with the Fed’s (US Federal Reserve) decision to keep rates unchanged, citing stable jobs market and inflation that remains somewhat elevated.”

“Comments from [Fed] Chief [Jerome] Powell on top of Trump tax [plus] tariff policy impact so far suggest non-change in the stance until mid-year,” it said, noting “yields are pricing in no rate cuts until June 2025, and even then, conviction is lukewarm at best (35 to 45 percent probability.”

“All these in play mean protracted risk-off behavior across markets; deep value and income strategy is reiterated amid compression of multiples to historically low levels and higher dividend yield entry points,” it added.

2TradeAsia said “a break below 6,000 is critical — while this may primarily be a knee-jerk reaction to negative headlines, a breach in this key trendline is major and warrants caution in short-term trades.”

“Monitor potential attempts at recovery [this week], as oversold conditions may attract bargain hunters,” it added.

“Maintain composure, capitalize on despair.”