PHILIPPINE STOCKS will continue to be weighed down by volatility this week amid the ongoing conflict in the Middle East and lingering inflation concerns at home.

On Friday, the benchmark Philippine Stock Exchange index (PSEi) dropped by 1.22% or 80.19 points to end at 6,443, while the broader all shares index fell by 1% or 34.77 points to close at 3,421.55.

Week on week, the PSEi sank by 3.25% or 216.39 points from the 6,659.39 close on April 12.

“Sentiment remained subdued amid geopolitical tensions and macro headwinds,” online brokerage firm said in a market note.

For this week, a “strong and sustainable rebound” for the market might not be seen yet due to inflation and geopolitical concerns, Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.

“Main concern [this] week may still be the Middle East tensions, particularly the course of action that Iran would take following the attack from Israel. A retaliation by the former may send the market lower,” Mr. Tantiangco said.

Iran’s foreign minister on Friday said Tehran was investigating an overnight attack on Iran, adding that so far a link to Israel had not been proven as he downplayed the strike, Reuters reported.

“Inflation concerns are also expected to weigh on the market amid inflationary risks at play including rising oil prices, tight energy supply, El Niño’s impact on our agricultural production, and weakening peso. Finally, investors are expected to watch out for catalysts that could bring back bullish sentiment,” Mr. Tantiangco added.

Investors could also continue to buy bargains following the market’s decline, he said.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message that the PSEi’s major support is seen at 6,360 while major resistance is at 6,740-6,820.

“Any healthy further upward correction at the PSEi could be possible, especially if the markets already priced in most or all the bad news related to the recent geopolitical risks due to increased tensions in the Middle East,” he said.

“Bargain hunters are on the lookout for discounts especially if the geopolitical situation stabilizes. Although the market would remain on a wait-and-see stance in the coming days and weeks on how future geopolitical risks evolve,” he added. put the PSEi’s immediate support at 6,300 and resistance at 6,550-6,600.

“The PSEi is now just a touch below where it was at from its year-end 2023 close. Expect a shift from growth and deployment to capital preservation while risks abound. Consequently, passive income making plus bargain hunting are likely to outperform in the near-term, while growth stories are being recooked amid new variables for the second half,” it said.

Mr. Tantiangco placed the market’s support at 6,400 and resistance at 6,700. — R.M.D. Ochave with Reuters