Stocks nosedive after US, Iran exchange strikes

The Philippine Stock Exchange Index (PSEi) nosedived on Thursday, plunging 1.73 percent to 5,859.94, while the peso weakened modestly to P61.59 from the previous P61.56 close after the latest military exchange between the United States and Iran dampened hopes for a near-term diplomatic settlement.

Markets reopened after the Eid al-Adha holiday to reports of retaliatory strikes between US and Iranian forces, testing the already fragile ceasefire agreement and undermining optimism earlier this week that a peace deal was imminent.

Equity investors reacted cautiously to the renewed tensions and latest spike in global oil prices as markets priced in potential persistent supply disruptions in the Middle East, as higher oil prices and inflationary pressures threaten corporate profitability while weakening broader economic growth should the conflict persist.

Amid the renewed uncertainty, trading activity remained subdued, with net value turnover at P4.76 billion. Foreign investors also remained net sellers, posting outflows totaling P517.08 million.

All sectoral indices closed lower, led by conglomerates, which declined 2.62 percent. Only three PSEi members finished in positive territory. GT Capital Holdings Inc. (PSE: GTCAP) posted the strongest gain, rising 0.67 percent to P478.20, while DigiPlus Interactive Corp. (PSE: PLUS) emerged as the session’s worst performer, plunging 6.46 percent to P11.00.

In the currency market, the peso closed at P61.595 per US dollar after trading between P61.55 and P61.71 intraday, based on Bankers Association of the Philippines data. The move came as the US dollar strengthened broadly across Asian forex markets amid renewed safe-haven demand following the latest strikes.

However, the peso posted a relatively milder decline compared with the local bourse. Although global oil prices remained elevated, Brent crude did not breach the US$100-per-barrel level, with forex traders interpreting the latest developments as serious, yet still contained, particularly as Washington continued signaling that further escalation was not its preferred outcome.

Regional currencies also weakened against the dollar, with the Japanese yen sliding toward ¥159.8 per US dollar from around ¥159.2 previously, the Indian rupee weakening to near ₹95.7 per US dollar from roughly ₹95.4, and the Indonesian rupiah softening toward Rp17,000 per US dollar from about Rp16,900. Rising oil prices continued to pressure oil-importing economies like the Philippines by worsening inflation and trade balance concerns.