EXPECTATIONS of further policy easing after slower economic growth in the first quarter and easing inflation are expected to drive Philippine stocks this week.

Stock market sentiment would also be dictated by how well midterm elections pan out on May 12, analysts said.

“Despite a GDP (gross domestic product) miss, the Philippine Stock Exchange Index (PSEi) nearly touched 6,500, buoyed by resilient local earnings and investor optimism around an earlier-than-expected Fed rate cut,” online brokerage firm 2TradeAsia.com said in a market note.

On Friday, the bellwether PSEi rose 1.07% or 68.71 points to 6,458.2, while the broader all-share index added 0.6% or 22.5 points to 2,762.85. Week on week, the index rose 0.72% or 46.34 points.

Markets will be closed on Monday as Filipinos pick a new set of congressmen, 12 of the 24-member Senate and thousands of local officials in midterm elections considered a referendum of President Ferdinand R. Marcos, Jr.’s three-year rule.

Investors would monitor the results of the May 12 elections, Japhet Louis O. Tantiangco, a senior research analyst at Philstocks Financial, Inc., said in a Viber message.

“Investors are expected to watch out for the results of the midterm elections here at home as these would provide clues on future policies,” he said.

Mr. Tantiangco said the market would also be driven by hopes of further local policy rate cuts after slower inflation in April and the weaker-than-expected economic growth last quarter.

“Hopes of aggressive monetary policy easing by the Bangko Sentral ng Pilipinas for the rest of the year following inflation and GDP data are still expected to provide support to the local market,” he added.

Inflation slowed to 1.4% in April from 1.8% in March and 3.8% a year earlier as food and transport prices declined.

Last month’s inflation was also the slowest in over five years.

The Philippine economy expanded by a weaker-than-expected 5.4% in the first quarter, slower than 5.9% a year ago, amid uncertainty from US President Donald J. Trump’s sweeping reciprocal tariffs.

“Investors are also expected to watch out for developments with respect to trade talks with the US, with signs of progress to be taken by the market positively,” Mr. Tantiangco said.

“If the market is able to hold its ground at 6,400, this will be considered as its new support while the next resistance level would be at 6,600,” he added.

Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., put the PSEi’s minor support at 6,255 to 6,360 and resistance at 6,490 to 6,516.85.

2TradeAsia.com estimated the PSEi’s support at 6,200, primary resistance at 6,500 and secondary resistance at 6,600.

“Despite softer growth, earnings thus far, particularly in consumer and banking names, have proven resilient, and with election tailwinds extending into the second quarter, the broader picture remains constructive for local risk assets,” it said.

“Monitor volume as momentum may pick up post-election once the political noise clears and fiscal visibility improves,” the brokerage said. “While PSEi attempts to find escape velocity past 6,500, focus on quality and second-half follow-through.” — Revin Mikhael D. Ochave