With no major economic data scheduled for release this week, the local stock market is expected to remain weighed down by the ongoing conflict between Israel and Iran and the inflationary effects of its impact on oil prices.

Philstocks Financial Research Manager Japhet Tantiangco said the local market was down last week “as tensions in the Middle East take the best of investors’ sentiment. Trading has been lethargic for the most part of last week reflecting tepid market confidence amid lingering risks.”

He added that, sentiment this week could remain bearish due to the ongoing Israel - Iran conflict which, if it continues to push oil prices higher and cause the Peso to depreciate further, may pull the local market lower.

“A further escalation of the said conflict is also expected to be a significant headwind for the local bourse,” Tantiangco noted.

Online brokerage firm 2TradeAsia.com said “The market's wall of worry continues to steepen. The recent flare-up between Iran and Israel dominated global headlines, reviving concerns over oil supply disruptions and clouding the inflation outlook just as central banks were trying to pivot.”

“At the same time, trade tensions have not abated materially despite the looming July 9 deadline (when the pause on Liberation Day levies will be lifted), amplifying uncertainty around global supply chains and corporate cost structures,” it added.

The brokerage noted that, “With companies already retreating from proactive inventory builds, even modest disruptions now carry outsized impact on margins and visibility.”

“Ultimately, we view further re-rating of equity regional risk premia as these uncertainties are seen to linger for much of the third quarter, and that earnings visibility is being eroded not by fundamentals per se, but by policy opacity.

With the Philippine central bank signalling more rate cuts, 2TradeAsia.com said the Philippines is now diverging from more cautious regional peers and offering some near-term relief to rate-sensitive segments of the market.

“Select banks, property developers, and discretionary consumer names could benefit, though the upside remains modest given subdued nominal gross domestic product growth,” it said.

The brokerage warns that, “Markets remain highly sensitive to exogenous shocks-both geopolitical and policy-driven-making broad beta positioning inefficient.

“Until visibility improves on both global trade architecture and domestic fiscal execution, rallies should be viewed as opportunities to reduce exposure to crowded themes, while dislocations can be used to accumulate names with asymmetric payout structures. This is a market for underwriting, not chasing.”

Given headwinds due to weakening consumer spending and jobs generation momentum as well as geo-political tensions, COL Financial Chief Equity Strategist April Tan said “we advise investors to consider taking profits on stocks that have rallied and just be ready to re-enter on dips.”

For stock picks, she said they favor Aboitiz Power and RL Commercial REIT, as AP stands to benefit from proposed PSEi index changes, as it could be added back to the index while RCR’s acquisition of nine Robinsons Malls will significantly boost the size and attractiveness of its portfolio, grow its market capitalization, and increase its potential to be added to the index.