This week, stock market investors will continue to take cues from developments in the Middle East, particularly whether the temporary ceasefire will hold and if there will be progress in United States (US)-Iran negotiations.

“Investors are expected to monitor developments among the countries involved in the war. Progressing negotiations and signs that a deal would be reached are expected to lift the market further,” said Philstocks Financial Inc. research manager Japhet Tantiangco.

He added that, “If the situation regresses, however, the local market is expected to decline. Overall, investors are still advised to be cautious as the US-Iran ceasefire is deemed fragile.”

Rizal Commercial Banking Corp. (RCBC) chief economist Michael L. Ricafort also said the major catalyst for global financial markets would still be new developments in the war in the Middle East, especially the fragile two-week ceasefire and the reopening of the Strait of Hormuz.

Online brokerage 2TradeAsia.com said that while a ceasefire between the US and Iran has officially commenced, shipping through the Strait of Hormuz, based on recent data, remains a mere trickle—a downtrend into the weekend—as maritime insurers await verified de-escalation.

“Near-term projections suggest the fuel crisis may worsen before it improves, with energy analysts drawing parallels to the 1970s oil shocks. The International Monetary Fund (IMF) has transitioned from caution to an outright warning, noting that a prolonged conflict-driven inflation crisis threatens to derail global growth,” it added.

Meanwhile, Ricafort said the local market will also take cues from the overseas remittance numbers to be released on Wednesday, April 15 to see if overseas Filipino workers (OFWs) are sending less money home because of the war.

Major upcoming US economic data include existing home sales, producer price index (PPI), the US Federal Reserve’s (Fed) Beige Book, jobless claims, and industrial production and capacity utilization.

Amid war-fueled market volatility, 2TradeAsia.com advises investors to emphasize durability, as any eventual resolution will leave supply chains and energy politics different from pre-war norms, and asset selection should also acknowledge the upcoming “new normal.”

“While market cycles suggest a recovery is inevitable, the immediate path is rocky and likely to get worse before it gets better,” the brokerage warned.

COL Financial Group Inc. chief equity strategist April Lynn Tan said the oil crisis is bound to get worse before it gets better and, against this backdrop, coal miners, power companies, and water utilities are likely to be the most resilient. Telcos and supermarket operators should also remain relatively defensive, although margins may come under pressure.

On the other hand, airlines, importers, toll operators, discretionary consumer companies, banks, property firms, and real estate investment trusts (REITs) are most vulnerable to weaker demand and lower valuations.

Given COL’s view that the oil crisis is likely to worsen before it improves, Tan said investors should focus on resilient companies such as Citicore REIT Corp. (CREIT), Aboitiz Power Corp. (AboitizPower), Maynilad Water Services Inc., and First Gen Corp.