DEVELOPMENTS in the US-Israeli war on Iran will continue weighing on the stock market, analysts said, with a possible de-escalation likely to drive a return to the 6,000 level.
The benchmark Philippine Stock Exchange index capped a holiday-shortened trading week by closing at 5,998.68 last Wednesday, snapping a four-week losing streak.
However, analysts said the upside may remain limited amid unresolved geopolitical uncertainties.
President Donald Trump’s latest 48-hour deadline for Iran to make a deal and open the Strait of Hormuz, or else “all hell will reign (sic) down on them,” could also see markets worldwide again dropping.
Online brokerage 2TradeAsia.com said global conditions were continuing to be shaped by the conflict in the Middle East, now in its sixth week, with oil prices staying elevated due to supply disruptions from Hormuz’s closure.
While expectations of a near-term ceasefire have buoyed markets, the firm cautioned that normalization in supply chains and inventories could take weeks or even months, sustaining inflationary pressures.
“Even a near-term ceasefire would not deliver immediate relief,” it said, noting that higher energy costs may continue to weigh on broader equities while supporting select oil-related plays.
Japhet Tantiangco, research manager at Philstocks Financial Inc., said bargain valuations could offer some support as the PSEi is trading at a price-to-earnings ratio of 10.1x, below its five-year average of 14.4x.
Still, he warned that volatility is likely to persist as doubts linger over the timeline of the conflict’s resolution, especially amid continued military threats from the US toward Iran.
“Uncertainties over the conflict... are still expected to weigh on investors’ sentiment,” Tantiangco said.
At home, the impact of rising fuel prices is expected to ripple across the economy, potentially dampening consumption and output during the summer months.
2TradeAsia.com said the Bangko Sentral ng Pilipinas (BSP) may have limited room to ease policy compared to last year, as inflation risks remain tilted to the upside.
The brokerage expects March inflation, data for which will be released on April 7, to settle near the upper end of the central bank’s 3.1- to 3.9-percent forecast, with the possibility of breaching the 4.0-percent ceiling.
On the positive side, developments such as efforts by around 40 countries to reopen Hormuz and measures to ensure safe passage of vessels, including those destined for the Philippines, could help ease market concerns.
For the week ahead, analysts expect investors to closely monitor inflation data for signals on how the geopolitical crisis is feeding into the domestic economy.
The market remains in a bearish trend, with the PSEi still trading below key long-term indicators despite recently closing above its 10-day moving average.
Analysts advised investors to remain selective and keep liquidity on hand, positioning defensively while awaiting clearer signals on both the geopolitical and inflation fronts.