The stock market could be entering a stronger recovery phase after the Philippine Stock Exchange index (PSEi) broke through key resistance levels, with a stable peso adding to optimism that local equities can sustain their recent gains despite inflation concerns and geopolitical risks.
The improving currency outlook is emerging as a key tailwind for the market, helping cushion imported inflation while boosting confidence that the Bangko Sentral ng Pilipinas (BSP) has room to keep financial conditions supportive.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC), said the PSEi has climbed above the 6,325 level and exceeded its June 16 high of 6,396.23, strengthening the case for a continued rally.
According to Ricafort, the benchmark index could next move toward the 6,501 to 6,554 gap area before attempting to retest the February peak of 6,673.61, reached before heightened tensions in the Middle East triggered a broad market sell-off.
He said support remains solid between 6,170 and 6,265, with stronger buying interest expected at 6,015 to 6,090 and the key 6,000 psychological level. Longer-term support at 5,900 and 5,840 has continued to underpin the market’s broader uptrend since late 2025.
The peso is also expected to stay relatively steady against the US dollar, supported by possible BSP intervention to temper excessive volatility and the likelihood of a policy rate hike at the central bank’s Aug. 27 meeting. Ricafort said a firmer currency could ease import costs and help keep inflation expectations in check, reinforcing the market’s positive momentum.
Still, analysts believe investors should remain selective.
Brokerage 2TradeAsia recommended accumulating high-conviction energy and digital infrastructure stocks, citing continued global fund rotation toward AI-related sectors such as data centers, semiconductors and power infrastructure.
It also advised caution on richly valued consumer stocks, warning that rising fuel costs, higher wages and increased palay procurement prices could keep inflation elevated and inject fresh volatility into the market even as the PSEi’s recovery gathers pace.
