Local stock market investors will continue to digest second-quarter earnings reports this week while keeping a close eye on developments in US trade policies.

Philstocks Financial Research Manager Japhet Tantiangco said investors are looking for new catalysts.

“Investors are expected to watch for updates regarding US President Donald Trump’s trade policy plans, primarily on his chips and semiconductor tariffs,” he noted.

Tantiangco added that corporate reports will also remain a focus. “Prospects of further easing by the BSP [Bangko Sentral ng Pilipinas], following supportive economic data last week, may continue to give the market support,” he said.

For the past nine weeks, the local market has alternated between gains and losses. “The lack of clear direction reflects investors' indecisiveness as they continue to weigh mixed factors from prospects of further policy easing by the BSP, risks and uncertainties on the US’s protectionist trade policies, and the overall status of the general economy,” Tantiangco explained.

With the market moving sideways, it remains undervalued fundamentals-wise. As of last week’s close, the Philippine Stock Exchange index’s (PSEi) price-to-earnings ratio was 10.9 times, which is below its five-year historical average of 17.3 times and the regional average of 17.2 times.

Online brokerage 2TradeAsia.com noted that the BSP will announce foreign direct investment figures for May on Monday and remittance data on Friday.

Overseas, the clash between President Trump and Federal Reserve Chair Jerome Powell is being speculated to threaten central bank independence. The resulting volatility has led to a rotation into safe-haven assets like gold.

2TradeAsia.com advises investors to favor domestic-focused firms with strong fundamentals, as the BSP's easing cycle supports growth. Conversely, tariff pressures suggest caution on export-oriented stocks.

For stock picks, Abacus Securities Corporation has hoisted a BUY rating for Manila Water Company after DMCI Holdings reported a 30 percent increase in the earnings of Maynilad Water Services Inc., and MWC may report similar numbers for the period.

Meanwhile, COL Financial has a BUY rating on Megaworld as shares are undervalued and “We have seen steady improvements in its recurring businesses.”

“Additional inventory, improvements in lease rates, and healthy occupancy levels have helped grow its rental revenues, while hotels have capitalized on increased travel, MICE activities, and better pricing schemes.

“Based on our estimates, MEG investment properties alone are worth around ₱4.29 per share. The residential sector admittedly is still somewhat of a concern given the declining take-up sales and high RFO inventory, but on a brighter note, MEG has ₱110 billion in unbooked revenues, which has allowed them to stay on a growth trajectory in terms of revenues,” COL said.