Market to stay cautious amid fragile US-Iran truce

PHILIPPINE SHARES may trade sideways for the rest of the week as investors continue to monitor developments in the Middle East and reposition ahead of the MSCI rebalancing this weekend.

On Tuesday, the Philippine Stock Exchange index (PSEi) fell by 0.76% or 46.14 points to close at 5,963.24, while the broader all shares index declined by 0.53% or 17.94 points to 3,353.94.

Philippine financial markets were closed on Wednesday (May 27) for a regular holiday in observance of Eid’l Adha.

Unicapital Securities, Inc. Equity Research Analyst Peter Louise D. Garnace said Tuesday’s decline came as fresh US strikes in southern Iran heightened uncertainty in the Middle East, driving oil prices higher and raising concerns over ongoing peace talks.

These concerns could continue to weigh on sentiment when the market reopens on Thursday, which may lead to extended rangebound trading, he said.

“Heightened trading activity is expected on Friday as investors align their portfolios with the results of the MSCI quarterly rebalancing announcement on May 13. For MSCI Philippines Standard Index, Jollibee Foods Corp. was demoted to MSCI Philippines Small Cap Index, wherein Robinsons Retail Holdings, Inc. was also deleted. All changes will be implemented as of the close of on May 29, effective June 1.”

Chinabank Securities Corp. said the PSEi may trade within the 5,880 to 6,020 range for the rest of the week.

“Investor sentiment will likely remain tied to developments in the US-Iran negotiations, with further progress toward a deal supporting positive price action and any setback weighing on the market. In addition, the conclusion of the MSCI rebalancing on Friday could also add to volatility as index-tracking funds adjust their portfolios.”

Aside from the MSCI rebalancing, end-of-month window-dressing could also lead to higher value turnover as the week closes, Regina Capital Development Corp. Head of Sales Luis A. Limlingan said.

He added that the market will likely take cues from movements on Wall Street.

Meanwhile, economists from the University of Asia and the Pacific (UA&P) said in its May 2026 The Market Call report that the Philippine stock market will likely continue to consolidate as investors weigh the risks from the Middle East conflict amid the lack of a definitive peace deal.

“Technical indicators suggest that the market is neither over- nor undersold within a three-month period, which signals more of the same in the absence of significant catalysts. Local investors have proven willingness to bargain hunt for oversold counters, while foreign buying remains weak and unsupportive. Movements will likely be seen in sector rotations,” UA&P said.

“For long-term investors, the PSEi maintains a very attractive spread against even recently higher bond yields, which points to significant undervaluation.” — Alexandria Grace C. Magno