With the conclusion of the first-quarter earnings season, the local stock market is seen turning more bearish as investors take profits from recent gains, with sentiment dampened by the weaker peso, local politicking, and the unresolved Middle East conflict.

“The local market has shown positive momentum in the past two weeks amid bargain hunting with support from foreign funds. However, overall trading was tepid, reflecting weak investor confidence amid macroeconomic and political concerns,” said Philstocks Financial Inc. research head Japhet Tantiangco.

Thus, the local market could move with a downward bias on profit-taking this week following the two-week rally. Lingering concerns may also continue to weigh on sentiment.

“The Middle East conflict has been ongoing for more than one and a half months already with no deal in sight. This keeps global oil prices elevated with Brent crude maintaining its ground at the $100-per-barrel level. Fears that the conflict would re-escalate may keep investors on the edge,” Tantiangco noted.

Meanwhile, the peso has slipped back below the ₱61-per-United States (US) dollar level, posing upside risks to the Philippines’ inflation rate. It may also discourage foreigners from investing in the country.

Tantiangco added that “the ongoing political turmoil in the Senate may divert their attention away from mounting economic concerns and this may continue to weigh on market sentiment.”

For online brokerage 2TradeAsia.com, the global macroeconomic landscape has pivoted back to pre-ceasefire conditions as US-Iran tensions escalated toward direct aggression earlier last week.

Domestically, the 31-percent slump in February foreign direct investment (FDI) inflows signals that foreign conviction, for the most part, remains sidelined. This is made worse by stagflation concerns now bleeding into the mainstream, as stagnant growth meets sticky supply-side pressure.

“In this environment, banks are the runaway winners here, uniquely positioned to capture value from a transitioning interest rate climate and accelerating loan growth since March. For now, domestic political maneuvering and index rebalancing cues will likely overshadow corporate earnings, as the market prioritizes capital preservation and yield over speculative growth,” 2TradeAsia.com said.

For stock picks, Abacus Securities Corp. has a BUY rating for Apex Mining Co. Inc. after upgrading its fair value estimate for the stock as the firm announced capital expenditures (capex) to increase plant capacity.

The stock brokerage also has a BUY rating for Monde Nissin Corp., which is seen sustaining its earnings growth despite price increases and as its meat alternative business has turned profitable.