The Philippine Stock Exchange index (PSEi) sank to its lowest level in more than five years on Monday, extending its losing streak as investors reacted to sluggish growth data, storm damage and higher local costs.

The benchmark PSEi dropped by 56.73 points or 1 percent to close at 5,702.64, its lowest since 28 May 2020, when it ended at 5,570.22. The index has now fallen for the second straight trading day and for the third time in four sessions.

Combination of headwinds

Michael Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC), attributed the downturn to “a combination of domestic and external headwinds” including the slower-than-expected 4 percent GDP growth in the second quarter of 2025 — the weakest in more than four years — as well as lingering economic disruptions caused by recent typhoons and flooding.

“These developments could further slow down local economic and GDP growth and weigh on valuations compared to earlier market expectations,” Ricafort said.

He added that investors were also digesting the latest softer net foreign direct investment (FDI) figures, higher fuel and electricity prices and the Meralco rate hike for November.

These were “partly offset by positive data,” he noted, citing the decline in banks’ non-performing loan ratio to a six-month low of 3.31 percent and the recent improvement in manufacturing activity based on the Monthly Integrated Survey of Selected Industries (MISSI).

The market’s major technical support remains at the 5,400 level — last seen during the pandemic — while initial resistance stands at the 5,805 to 5,828 range, followed by the psychological 6,000 mark.

On the external front, he observed that US stocks managed a modest recovery of 0.1 to 0.2 percent after sliding to two-week lows, buoyed by optimism that US lawmakers were nearing a deal to end the prolonged government shutdown.

Peso slightly strengthened vs US dollar

Meanwhile, the peso slightly strengthened against the dollar, closing at P58.96 on Monday from P59.04 last Friday.

Ricafort said the peso’s modest rebound came after the US dollar index eased to one-week lows, while global crude oil prices dropped to five-month lows. He also pointed to the improvement in the Philippines’ gross international reserves (GIR) — now near a record high of $109.7 billion (approximately P6.48 trillion), equivalent to 7.3 months of imports, far exceeding the international benchmark of 3 to 4 months.

“High GIR levels continue to provide structural support for the peso, serving as a buffer against any undue speculation or volatility,” Ricafort said.

He added that the peso also benefits from seasonal inflows of overseas Filipino workers’ remittances ahead of the Christmas holidays, which tend to increase demand for pesos as families prepare for holiday spending.

While the peso remains “relatively stable” just below the P59 psychological level, the Bangko Sentral ng Pilipinas continues to play a key role in smoothing volatility when necessary.

“Stable exchange rates help manage import costs and inflation — a vital component of macroeconomic stability,” Ricafort noted.

Immediate support for the peso stands at P58.60 to P58.70, with the next key resistance at P59.20 to P59.26, its record intraday high on 29 October.