Stocks may stay under pressure amid ME conflict

PHILIPPINE STOCKS may continue move sideways this week as persisting uncertainty over the war in the Middle East (ME) may temper recent gains from bargain hunting and slower domestic inflation last month.

On Friday, the Philippine Stock Exchange index (PSEi) rose by 0.44% or 26.45 points to close at 5,938.38, while the broader all shares index went up by 0.33% or 11.23 points to end at 3,334.31.

Week on week, the PSEi increased by 169.62 points from May 29’s finish of 5,768.76.

“The PSEi surged 169 points to 5,938 as several positioned in oversold counters. May’s inflation print cooled versus estimates at 6.8% from April’s 7.2%, soothing off-cycle rate hike fears,” online brokerage 2TradeAsia.com said in a note.

“The local market has been picking up momentum recently on the back of bargain hunting, boosted by the Philippines’ below-expected May inflation rate,” Philstocks Financial, Inc. Research Manager Japhet Louis O. Tantiangco said in a Viber message. “However, the sustainability of the momentum remains questionable, as the market continues to face uncertainties, especially with the US-Iran situation.”

Headline inflation eased to 6.8% in May from 7.2% in April but quickened from the 1.3% in the same month last year, the Philippine Statistics Authority reported on Friday.

This was the first month-on-month slowdown since November 2025 and the slowest inflation rate since the 4.1% in March.

The May outcome was below expectations, as a BusinessWorld poll of 16 economists yielded a median estimate of 7.9% for the month, while the Bangko Sentral ng Pilipinas (BSP) gave a forecast of 7.1%-7.9%.

For this week, Mr. Tantiangco said that while the market welcomed the slower May inflation print, investors remain cautious as the latest print remains above the BSP’s 2%-4% target. “Hence, monetary policy tightening may still be on the table.”

He added that the peso remains weak despite its recent recovery.

“The situation in the Middle East is deemed unstable amid recent exchanges of military force between the US and Iran. The dimming outlook for a peace deal between the two may weigh on the market next week. If tensions re-escalate, it may drag the local bourse lower.”

Mr. Tantiangco said the PSEi continues to be on a downtrend even after its latest rebound as it remains below the 6,000 line.

“Moving forward, strong catalysts, particularly ones that point to a further slowdown of inflation and a re-acceleration of economic growth, are deemed needed for the market to break out of its current resistances with conviction. Without such, the market may still move with a downward bias.”

Key trading drivers for this week are the release of the results of the Labor Force Survey for April and the latest foreign direct investments data.

For its part, 2TradeAsia.com put the PSEi’s immediate support at 5,800, resistance at 6,050, and secondary resistance at 6,300. — Alexandria Grace C. Magno