Mideast conflict tanks market, peso

The local bourse on Monday, 2 March, nosedived, with the benchmark Philippine Stock Exchange Index (PSEi) down 2.79 percent to 6,426.83 as markets reopened to heightened tensions in the Middle East — raising global oil prices, weakening the peso and souring investor confidence.

The ongoing conflict between Israel and Iran has destabilized the region, with hundreds killed, including Iranian Supreme Leader Ali Khamenei.

Temporary closure of Strait of Hormuz

The conflict has also resulted in the temporary closures of the Dubai and Abu Dhabi stock exchanges, as well as the Strait of Hormuz, a key shipping route connecting Middle Eastern oil-producing countries to the rest of the world.

According to the US Energy Information Administration, approximately 20 million barrels of crude oil passed through the strait daily in 2024 — equivalent to nearly 20 percent of global oil consumption.

TempPrior to the intensification of the conflict, Brent crude traded around $67–$73 per barrel and West Texas Intermediate (WTI) around $62–$66.

Following the attacks and shipping disruptions involving the Strait of Hormuz, prices jumped roughly 8–10 percent. As of press time, Brent has climbed to about $79–$82 per barrel, while WTI reached around $72–$75, reflecting fears that Middle East supply routes could be disrupted and global oil exports reduced.

Deteriorating sentiment

As a result, Filipino investors cashed in gains, with sentiment deteriorating due to the lingering effects of higher oil prices linked to the Middle East conflict.

Trading remained active, with net value turnover reaching P7.50 billion, while foreign investors were net sellers with outflows of P784.64 million.

Sector performance was broadly negative, with only the mining and oil index posting gains, up 0.10 percent, as investors rotated into precious-metal and commodity-linked names amid global uncertainty.

The services sector suffered the biggest decline, dropping 4.11 percent as risk appetite weakened. Market breadth was heavily negative, with decliners outpacing advancers 159 to 53.

Only two index constituents finished higher during the session. DigiPlus Interactive Corp. (PLUS) rose 3.73 percent, while Ayala Land Inc. (ALI) edged up 0.48 percent. Meanwhile, Ayala Corporation (AC) led the losses, plunging 6.17 percent to P563.00 as investors trimmed positions in large conglomerates.

Weakened local currency

The local currency also weakened due to the rise in global oil prices and a stronger dollar, with the peso slipping back past the P58 level to P58.20, from roughly P57.66 on Friday.

The US Dollar Index (DXY) moved back above the 104 level, while US Treasury yields climbed, with the 10-year yield hovering around 4.2–4.3 percent.

As reports of stalled US–Iran talks and rising regional tensions circulated, demand for dollars increased in global foreign exchange markets. Higher US yields tend to attract capital back into dollar assets, prompting investors to trim exposure to emerging-market currencies such as the peso.

Geopolitical developments also weighed on sentiment. Ongoing tension between the United States and Iran heightened fears of supply disruptions in the Middle East, pushing Brent crude prices toward the low-$80 per barrel range in recent trading.

For the Philippines, which relies heavily on imported fuel, rising oil prices typically worsen the trade balance and increase demand for dollars to pay for energy imports. That dynamic, combined with the stronger greenback globally, contributed to the peso’s pullback past the P58 level on Monday.