Stocks fall as yields, oil prices climb

The Philippine Stock Exchange Index fell 50.47 points, or 0.87 percent, to 5,738.40 on Tuesday, while the peso weakened 2 centavos, or 0.03 percent, to P62.565 per US dollar from Monday’s P62.545 close, as rising US Treasury yields, higher oil prices and continuing uncertainty over the US-Iran conflict kept investors cautious.

The local market extended its losses after Wall Street declined overnight, with global equities pressured by a renewed bond selloff. The 10-year US Treasury yield climbed above 5.27 percent, its highest level in 19 years, while the two-year yield approached 5 percent as markets increased bets on further US Federal Reserve tightening. Higher yields tend to raise borrowing costs and reduce the relative appeal of equities.

Oil prices also remained elevated as markets weighed the risk of prolonged disruptions from the US-Iran conflict. Brent crude climbed above $107 a barrel on Tuesday, while US West Texas Intermediate reached about $94 as concerns over supplies through the Strait of Hormuz persisted.

Reuters said Middle Eastern crude exports had recovered to 12.8 million barrels a day in September but remained affected by costly shipping workarounds.

Diplomatic efforts continued to provide a counterpoint to supply concerns. US and Iranian officials held separate discussions with mediators on Monday in a renewed attempt to end the seven-month conflict, with talks centered on an amended Iranian proposal.

All market sectors fell

All PSEi sectors declined, led by Industrials, which fell 1.20 percent. Trading remained relatively subdued, with P5.25 billion in net value turnover, while foreign investors turned net sellers with P973.48 million in net outflows.

Only six index members advanced. AREIT Inc. led the gainers, rising 1.90 percent to P37.50, while RL Commercial REIT Inc. was the weakest index performer, falling 4.62 percent to P6.20.

Modest peso decline

Meanwhile, the peso’s decline was modest despite the firmer dollar and higher oil prices. Reuters said the dollar index reached 101.27, its strongest level in two months, supported by rising US yields and expectations of further Fed tightening. Brent’s rise also reinforced inflation concerns ahead of key US economic data, including the PCE price index and nonfarm payrolls.