The Philippine Stock Exchange Index (PSEi) reversed course on Tuesday, falling 0.77 percent to 5,963.24, while 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.

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. (SM) gained 1.63 percent to P622.00, while Century Pacific Food (CNPF) 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.

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, while the FX settlement rate weakened to P61.561 from P61.426, indicating stronger demand for dollars as a safe-haven asset throughout the session.

Other Asian currencies also retreated against the greenback, with the Japanese yen weakening to around ¥159.2/USD from roughly ¥158.7 previously, the Indian rupee sliding to about ₹95.4/USD from near ₹95.1, and the Indonesian rupiah weakening past Rp16,900/USD from around Rp16,750. 

Brent crude and West Texas Intermediate prices both rose by around 2 to 3 percent following Monday’s pullback, with Brent back trading around the $100/barrel mark, reviving concerns over inflation, trade deficits, and stagflation risks for oil-importing economies like the Philippines.

Washington’s latest messaging contributed to greater market uncertainty. While the White House continued to say diplomacy remained the preferred path, US defense officials stressed that military responses would continue if American assets or allies were threatened.