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Overseas news
Militia group Hezbollah has rejected the US-brokered ceasefire plan aimed at ending the Israel-Lebanon conflict. Hezbollah demanded the total withdrawal of Israeli forces from Lebanon and an end to hostilities.
This could dim expectations for US-Iran peace because a ceasefire in Lebanon is among Iran’s conditions for any agreement with the US.
Amid continued hopes of a ceasefire in the Middle East, oil prices and US Treasury yields dropped. However, oil prices will likely continue to settle close to $100/barrel in the near term as the situation on the ground remains volatile.
A prolonged conflict in the region may continue to push fuel costs higher and affect the prices of goods worldwide.
Meanwhile, US stocks rose as investors exited AI shares while healthcare and financial stocks rallied. This happened as chipmaker Broadcom missed revenue expectations, triggering a sell-off in technology stocks.
Local developments
Data from the Bangko Sentral ng Pilipinas (BSP) showed that more foreign portfolio investments left the country than entered it from January to April.
These investments – also called “hot money” because of the ease by which they enter or leave the country – posted a net outflow of $1.601 billion as the Middle East conflict curbed investor appetite.
Hot money is expected to remain highly volatile, with high inflation and interest rates weighing down investor sentiment.
Relatedly, as investors braced for May inflation data, local stocks declined while bond yields rose. Meanwhile, the peso strengthened amid expectations that the BSP will raise interest rates to temper inflation.
High interest rates make borrowing more expensive for businesses and consumers. Increased borrowing costs tend to drive down business activity and make stocks less attractive.
Rate hikes also tend to boost the appeal of interest-bearing investments, like new bond issuances.
The news is mixed though trending to the negative. A wait-and-see approach might be best as you wait for further developments.
