A wave of anxiety has gripped investors, pushing the Philippine stock market into a “risk-off mode” as tensions escalate in the Middle East. The market’s reaction is acutely sensitive to oil prices, currently soaring to levels unseen in some time.
According to the President of the Philippine Stock Exchange, a key signal of returning stability would be a significant drop in oil prices – ideally back to around $80 per barrel. The current price of $131.97 is fueling uncertainty and driving market declines.
Fuel costs are already surging across Metro Manila, with gasoline prices poised to increase by P8 to P12 per liter, diesel by P15 to P18, and kerosene by a substantial P12 to P22. These increases threaten to push diesel prices as high as P144.20 per liter and gasoline to P102.50.
Monday saw a particularly sharp downturn, with the PSE index (PSEi) plummeting 1.98%, closing at 5,899.18 – its worst performance this year and a level not seen in nearly four months. The broader all-shares index mirrored this decline, falling by 2.04%.
Despite the immediate crisis, there’s a glimmer of hope tied to potential diplomatic efforts. Statements suggesting dialogue between leaders could offer a path to de-escalation, potentially limiting the long-term damage to the market.
However, the market isn’t solely reacting to international events. A recent corruption scandal involving flood control projects has also eroded investor confidence, adding another layer of complexity to the situation.
While the scandal initially weighed heavily on the market, with the PSEi declining 7.29% in 2025, strong corporate earnings from index companies offer a potential counterbalance. Initial public offering performances have also shown surprising resilience.
The key to restoring trust, however, lies in concrete action regarding the corruption allegations. Investors are waiting to see criminal cases filed and a clear demonstration of accountability, not just within the corporate sector, but at the government level.
Tuesday brought a slight reprieve, with the PSEi rising by 0.62%, but the underlying concerns remain. The market’s future hinges on both the resolution of the international conflict and a decisive response to domestic issues of governance and transparency.
