The Philippine Stock Exchange Index (PSEi) reversed course on Tuesday, falling 0.77 percent to 5,963.24. At the same time, the peso weakened to P61.56 per US dollar from Monday’s P61.465 finish as investor optimism over a possible US-Iran agreement faded following renewed military action in the Middle East (ME).

Sentiment weakened after US officials confirmed “self-defense” strikes against Iran-backed targets, reviving fears that negotiations between Washington and Tehran could stall. The latest developments tempered the optimism created by Monday’s reports of progress in US-Iran talks. Investors interpreted the mixed signals as evidence that geopolitical risks remain elevated despite ongoing negotiations.

Equity trading remained subdued, with net value turnover at P4.29 billion, while foreign investors were aggressive net sellers, recording outflows of P820.16 million. Mining stocks led sectoral gains, rising 1.42 percent on firmer commodity prices, while services declined 2.72 percent. SM Investments Corp. gained 1.63 percent to P622.00, while Century Pacific Food fell 4.32 percent to P27.70.

The latest US strikes also pushed the peso lower to P61.56 per US dollar, weakening by nearly 10 centavos from Monday’s close as risk aversion returned to global foreign exchange markets.

Rate hike jitters persist

Local uncertainties weighed down the mood, particularly fears that inflation could climb beyond 8 percent, fueling speculation about an unusually large 50-basis-point rate hike by the Bangko Sentral ng Pilipinas. 

These concerns reduced the appeal of equities and prompted a shift toward a risk-off posture. The Philippine market ended with 77 gainers, 117 decliners, and 53 unchanged, with a total turnover of P4.28 billion, net of extraordinary block sales.

The currency opened weaker at P61.45, traded within a P61.405–P61.65 range, and settled near session lows. The Bankers Association of the Philippines weighted average climbed to P61.582 from P61.437 previously. At the same time, the FX settlement rate weakened to P61.561 from P61.426, indicating stronger demand for dollars as a safe-haven asset throughout the session.