Read this in The Manila Times digital edition.
CONTINUED conflict between Israel and Iran could drive share prices lower this week, analysts said, but a likely Bangko Sentral ng Pilipinas (BSP) rate cut on Thursday may provide a lift heading into the weekend.
April overseas Filipino worker remittance data due today could also boost sentiment, they said, adding that investors will also be looking at the results of a Federal Reserve meeting for signs regarding the direction of US interest rates.
The benchmark Philippine Stock Exchange index (PSEi) closed 0.29 percent higher week-on-week last Friday at 6,395.59 but remains down 2.0 percent since the start of the year.
Philstocks Financial Inc. research manager Japhet Tantiangco sentiment this week would be challenged by developments in the Middle East after Israel launched a major attack on Iran, targeting its nuclear facilities, scientists and military leaders.
Iran subsequently retaliated and warned that it could also attack Western countries that help Israel.
"A further escalation of such is expected to drive oil prices higher. This in turn may derail our country's efforts against inflation, [and] pricing this would be negative for the market," Tantiangco said.
Investors, meanwhile, will be looking for clues as to how many more BSP rate cuts to expect.
"Hints of more policy easing in the latter part of this year from the BSP may give sentiment a boost," Tantiangco added.
Unicapital Group research head Wendy Estacio-Cruz, meanwhile, said "the market is now looking forward to April cash remittances data on June 17 and the BSP's next interest rate decision on June 19."
Online stock brokerage firm 2TradeAsia.com said "market volatility in the coming weeks will again gyrate on headlines, as US-China trade negotiations take center stage once again."
US and Chinese officials agreed to a framework for trade talks last week and President Donald Trump claimed that a deal had been reached, although details have not been released.
Trump has roiled markets and kept investors on edge by announcing and suspending tariff hikes. Higher import duties announced in April remain on hold but a July deadline to finalize trade deals with major trading partners is nearing.
"We reiterate that trade policy uncertainty compresses corporate planning cycles, elongates supply chain risk premiums, and reinforces caution in global capex (capital expenditures)," 2TradeAsia said.
The market, it added, remains "tactically fragile, with price action seemingly dictated by event risk over macro trend conviction."
"Positioning should be built around optionality, balance sheet strength and liquidity," it said, until a better view of the trajectory of US-China trade negotiations and the US Federal Reserve's policy direction emerges.