Investors are bracing for volatile week as the persistent conflict in the Middle East overshadows local equities, with upcoming inflation data expected to reveal the extent of the economic damage.

The Philippine Stock Exchange Index (PSEi), which has struggled to maintain the 6,000 level, faces renewed pressure from elevated oil prices and a weakening outlook for domestic consumption.

The release of March inflation figures on Tuesday will serve as critical barometer for the Bangko Sentral ng Pilipinas (BSP). Analysts expect the headline rate to test the upper limit of the central bank’s 3.1 percent to 3.9 percent forecast range, with some warning of a surprise move beyond four percent. The surge in global crude costs, sparked by the conflict now entering its second month, has already begun to filter through to local pump prices and utility rates.

“Uncertainties over the conflict in the Middle East are still expected to weigh on investors’ sentiment,” said Japhet Tantiangco, research manager at Philstocks Financial.

He noted that military threats between the United States (US) and Iran have cast doubt on claims that the hostilities would conclude within weeks. While Iran’s decision to allow safe passage for Philippine-bound oil tankers through the Strait of Hormuz has provided some relief, the broader geopolitical risk remains high.

The prolonged nature of the conflict is complicating the recovery for Southeast Asia’s fifth-largest economy. Online brokerage 2TradeAsia.com observed that even a near-term ceasefire would not provide immediate economic relief.

The firm cited the time required for supply chain disentanglement, the rerouting of tankers, and the rebuilding of inventories as factors that will keep costs high for months.

The BSP’s ability to support growth through monetary easing appears increasingly limited. With inflation risks ticking higher, the central bank’s room for maneuver is more constrained than it was last year. This leaves the economy vulnerable to “demand destruction,” where elevated prices for fuel and basic services stifle the household spending that typically drives Philippine gross domestic product.

Market participants are shifting toward defensive positions as they anticipate the weakest summer consumption figures since the pandemic.

“We note that even a near-term ceasefire would not deliver immediate relief,” 2TradeAsia.com said in a note to clients. “Headline inflation and Bangko Sentral policy risks have ticked higher on the back of the shock.”

Investment houses are recommending stocks with resilient business models to weather the volatility. COL Financial maintains a buy rating on Puregold Price Club Inc., citing its status as a pure-play grocery retailer that offers protection against inflationary spikes. The brokerage expects Puregold to sustain growth through its continued store expansion.

In the telecommunications sector, Unicapital Securities has a buy rating on PLDT Inc., pointing to stable earnings. Analyst Peter Louise D. Ganace said the company’s performance remains aligned with forecasts, supported by 5G adoption and enterprise demand, providing a hedge for investors as broader market sentiment remains bearish.