{"id":332992,"date":"2025-06-25T22:42:53","date_gmt":"2025-06-25T14:42:53","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=332992"},"modified":"2025-06-25T22:42:54","modified_gmt":"2025-06-25T14:42:54","slug":"commentary-impact-of-israel-iran-war-on-phl-inflation-and-stock-prices","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/commentary-impact-of-israel-iran-war-on-phl-inflation-and-stock-prices\/","title":{"rendered":"Commentary: Impact of Israel-Iran war on PHL inflation and stock prices"},"content":{"rendered":"\n

US inserts itself into Israel-Iran conflict<\/strong><\/p>\n\n\n\n

US President Donald Trump ordered a strike over the weekend on three Iranian nuclear enrichment sites, later declaring that the facilities have been \u201ccompletely and totally obliterated.\u201d Iran scaled up attacks on Israel following the strikes, but the Iranian foreign minister said that all options remain open in terms of their response to the attack. Russia and China called for an emergency UN Security Council to condemn the strike and call for a ceasefire, although anything coming out of that meeting will likely be vetoed by the United States.<\/p>\n\n\n\n

The Strait of Hormuz will likely play into it<\/strong><\/p>\n\n\n\n

One of the options open to Iran would be to close the Strait of Hormuz, through which 20% of global oil supply passes through. A prolonged closure of this narrow waterway can have significant impact on oil prices, although the United States will likely use its naval power to prevent this from happening. At this point, it must also be noted that although Iran is the third-largest oil producer in the world, it has been under sanctions for many years and it mainly supplies oil to China, which is the world\u2019s largest consumer of oil. As such, any supply shocks on the Iranian side will cause shortages in China and will lead them to turn to other suppliers which will drive up prices.<\/p>\n\n\n\n

Impact of increasing oil prices on inflation<\/strong><\/p>\n\n\n\n

Brent and WTI crude oil contracts jumped by 2.2% and 0.8% respectively following the airstrikes, and while Dubai crude markets are yet to open it is likely that the movement there will be much more exaggerated. Brent crude is now up $9.38\/bbl or 13.5% from where it was when Israel first attacked Iran on June 13. <\/p>\n\n\n\n

For reference, a 10% hike in oil prices typically translates to a 40bps (0.40%) increase in inflation, so we might see inflation heating up back to levels above 2.0% if prices remain elevated like this for a month or so. In addition, the peso tends to be sensitive to oil prices as we are a net importer of oil and higher prices would drive local demand for dollars. <\/p>\n\n\n\n

Coupled with the BSP\u2019s decision to cut last week, which narrowed the rate differential with the US down to 75bps, we may see additional pressure on the peso this week. As it stands, USDPHP has already depreciated by 1.7% week-on-week to P57.165\/USD despite the dollar (as measured by the DXY index) also weakening by 0.5% to 98.707 over the same period. This relationship between the peso and oil prices tend to fuel a positive feedback loop, which will likely drive inflation even higher.<\/p>\n\n\n\n

Stock recommendations <\/strong><\/p>\n\n\n\n

The effect of the Middle East conflict on the local market has been mostly sentiment-driven up to this point. But again, we will see a more direct impact as the situation drags on. As such, we adopt a risk-off stance towards the market and we stick with our defensive picks which mostly consist of dividend-yielding REITs (AREIT, RCR, FILRT), consumer staples (PGOLD, RRHI) and deep-discount value plays (GTCAP, MBT).<\/p>\n\n\n\n

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This report is prepared by PinoyInvestor\u2019s partner broker below. Find out more about our partner brokers<\/a> and sign up to avail their complete trading brokerage services.<\/em><\/em><\/p>\n\n\n\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

Here\u2019s a commentary on an important issue or event affecting the stock market<\/p>\n","protected":false},"author":6,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1124,11],"tags":[],"class_list":["post-332992","post","type-post","status-publish","format-standard","hentry","category-commentaries-special-reports","category-special-reports","generate-columns","tablet-grid-50","mobile-grid-100","grid-parent","grid-33"],"_links":{"self":[{"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/posts\/332992","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/comments?post=332992"}],"version-history":[{"count":1,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/posts\/332992\/revisions"}],"predecessor-version":[{"id":332994,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/posts\/332992\/revisions\/332994"}],"wp:attachment":[{"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/media?parent=332992"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/categories?post=332992"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/tags?post=332992"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}