August 13, 2021

Stocks and the peso may suffer as a result of the Delta Covid-19 variant

Concerns over the Delta variant’s role in the continuing increase in coronavirus disease 2019 (Covid-19) infections weighed on the Philippine Stock Exchange index (PSEi) and the peso on Friday.

The main stock index finished the week at 6,320.19 points, down 3.61 percent or 236.38 points from the previous week.

The Dow Jones Industrial Average fell 2.04%, or 82.99 points, to 3,976.94 points.

The Holding Firms index was down 5.21 percent throughout the day, while Property fell 3.88 percent, Services fell 2.54 percent, Mining and Oil fell 1.86 percent, and Industrial fell 1.12 percent.

Only the Financials index, which had been trading sideways for 0.02 percent, finished in the black.

A total of 1.93 billion shares worth PHP14.36 billion were traded.

Losers outnumbered gainers 134 to 63, with 45 shares remaining unchanged.

Chief economist Michael Ricafort of Rizal Commercial Banking Corp. (RCBC) traced risk-off sentiments in the local stock exchange and foreign currency markets to concerns about the possibility of extending the two-week enhanced community quarantine (ECQ) in the National Capital Region beyond August 20, given that daily cases have recently risen to over 12,000.

According to Ricafort, the number of cases is approaching the all-time high of 15,298 on April 2, 2021.

He believes that the introduction of additional Covid-19 vaccinations and the vaccination of more people will help to mitigate the economic effect of the pandemic.

He said that this would allow for the relaxation of mobility restrictions, greater economic reopening, and an increase in recovery prospects and investor values.

The main index’s next support level, according to Ricafort, will be between 6,100 and 6,200.

Meanwhile, the local currency finished the day at 50.481 to the dollar, down from the previous day’s closing of 50.39.

It started the day at 50.43 and closed at 50.418, averaging between 50.49 and 50.37.

The overall volume was USD641.17 million, down from USD723.3 million the previous day.

The peso’s immediate support level, according to Ricafort, is between 50.00 and 50.20.

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