STOCKS may continue to remain volatile this week amid rate hike fears due to rising inflation, the lockdown in China and the war in Ukraine.

The benchmark Philippine Stock Exchange index (PSEi) sank by 178.20 points or 2.57% to close at 6,731.25 on Friday, while the broader all shares index dropped by 72.34 points or 1.96% to 3,605.14.

Week on week, the PSEi declined by 267.34 points from its close of 6,998.59 on April 22.

Trading is seen to remain volatile this week, analysts said. The PSEi last week seesawed due to oil price movements, the lockdown in China, and hawkish comments from the Bangko Sentral ng Pilipinas.

Diversified Securities, Inc. Equity Trader Aniceto K. Pangan said in a text message that the market will remain volatile due to fears of rate hikes amid inflation concerns heightened by “supply constraints due to pandemic…, the Ukraine-Russia war, and China’s lockdown.”

“Some lockdowns in China, which is the world’s second biggest economy, could slow down economic recovery prospects and could aggravate some disruptions in the global supply chains that could also lead to higher inflation,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in an e-mail.

“The continued Russia-Ukraine conflict for more than 2 months already could add to inflationary pressures amid the resulting elevated global oil, energy, and other commodity prices,” Mr. Ricafort added.

On Sunday, Mainland China reported 8,329 new confirmed cases of coronavirus disease 2019 for April 30, Reuters reported.

Health authorities on Saturday said there were close to 16,000 sealed-off areas in Shanghai, with more than 4 million people prevented from leaving their homes. A further 5.4 million people were blocked from leaving their compounds.

Meanwhile, Russia carried out missile strikes across southern and eastern Ukraine on Saturday, Ukrainian officials said, and some women and children were evacuated from a steel plant in the besieged city of Mariupol after sheltering there for over a week.

Moscow has turned its focus toward Ukraine’s south and east after failing to capture the capital Kyiv in a nine-week assault that has flattened cities, killed thousands of civilians and forced more than 5 million to flee abroad.

Back home, the national elections to be held on May 9 will continue to affect trading.

“The final week of the national and local campaign could lead to increased election-related spending, thereby boosting economic and business activities and could also benefit some listed companies in terms of higher sales, net income, and valuations,” Mr. Ricafort said.

He placed the PSEi’s immediate support this week at the 6,600 to 6,700 levels and resistance from 6,940 to 6,990.

Meanwhile, Diversified Securities’ Mr. Pangan put immediate support at 6,800 and resistance at 7,100. — L.M.J.C. Jocson with Reuters

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