The local stock market is expected to remain cautious this week as investors await key catalysts, including US inflation and retail sales data, the MSCI rebalancing, and corporate earnings, while lingering concerns over the Middle East conflict and weaker Philippine economic growth continue to weigh on sentiment.

“Sentiment is seen to remain cautious moving forward amid the latest developments between the United States (US) and Iran. Latest macroeconomic data, especially on gross domestic product (GDP), may also be a cause of concern for the market,” said Philstocks Financial Inc. research manager Japhet Tantiangco.

He noted that “our second-quarter GDP data has posted slower expansion, implying that the local economy continues to lose growth momentum while the situation between the US and Iran remains uncertain as the two declare contradicting narratives.” Second-quarter GDP growth fell to a post-pandemic low of 2.3 percent.

Meanwhile, the peso has been improving its position against the US dollar but remains weak, while local treasury yields have been easing but remain elevated.

“If both continue in their current direction, then it may give the market a boost,” Tantiangco said.

Online brokerage 2TradeAsia.com, meanwhile, raised concerns about the July inflation data, pointing out that food inflation held steady at 5.4 percent while rice inflation accelerated to 17 percent.

“That is the component squeezing lower-income households the hardest, and it is happening at the same time consumption growth is already the weakest in over a decade. Core inflation stickiness is the detail the Bangko Sentral ng Pilipinas (BSP) will weigh most heavily going into August and is what is making it difficult for us to read the headline deceleration as a clean win,” it said.

The brokerage expects the BSP to raise interest rates this month, although growth concerns have shifted the balance more toward the status quo.

It noted that “Brent has traded in a wide $73-to-$90 band since the renewed Iran conflict and remains roughly 15- to 20-percent above pre-conflict levels, which keeps the inflation argument alive for one more move even as the BSP’s own 2026 inflation forecast sits at 6.4 percent, still well above the two- to four-percent target band.”

“We feel that the next two to three weeks are best used to position ahead of the BSP meeting rather than to hold a firm conviction on its outcome; trim exposure to domestic demand and construction-linked names where earnings risk from weak consumption (2.8 percent). Ride momentum in well-loved sectors: energy and semicon,” 2TradeAsia.com advised investors.

For stock picks, COL Financial Group Inc. gave Aboitiz Power Corp. (AboitizPower) and parent Aboitiz Equity Ventures Inc. (AEV) BUY ratings, saying AboitizPower’s long-term earnings growth outlook has improved following the ramp-up of its renewable energy (RE) capacity expansion initiative.

Aside from AboitizPower’s prospects, AEV is also seen to be well-positioned to benefit from the country’s growing sectors, such as airports.

Both COL Financial and Abacus Securities Corp. have BUY ratings on D&L Industries Inc. (DNL) after noting its unexpectedly strong performance in the second quarter despite macroeconomic headwinds.

“We view DNL’s second-quarter 2026 results as a positive surprise following the soft start to the year in the first quarter, which management believes may have marked the trough for 2026,” said COL research analyst Charmaine Co.

She noted that “Food Ingredients earnings appear to have reached an inflection point, with demand expected to hold up in the second half as broader consumer activity improves. In addition, third-quarter 2026 should benefit from easier comparables coming from a softer base in the same period last year when margins were pressured by near-peak coconut oil prices.”

Also noting the recovery in DNL’s food business due to lower coconut oil prices, Abacus said, “Outlook for the rest of the year should continue to post growth amid the lower base in the second half [of] 2025 that should lead to earnings upgrades in the near term and, in turn, should provide some relief to its share price performance.”