Philippine stocks experienced a significant downturn on Monday, plummeting as fears surrounding the escalating conflict in the Middle East gripped investors and triggered a widespread sell-off. The main stock index retreated sharply, falling back into the 6,400 range amidst growing global uncertainty.
The Philippine Stock Exchange index (PSEi) closed at 6,426.83, a substantial decrease of 2.78% or 184.41 points. This marked the largest single-day drop for the PSEi in over a year, echoing a similar plunge seen in April of the previous year.
Analysts pointed to the intensifying conflict between the US and Iran as the primary driver of the market’s decline. Concerns centered on the potential for negative economic repercussions, particularly a surge in oil prices due to disruptions in vital shipping lanes.
The crisis reached a critical point following retaliatory Iranian attacks after the deaths of a key leader, and initial strikes by Israel and the United States. These actions directly impacted shipping through the Strait of Hormuz, a crucial waterway for global oil transport.
Oil prices responded immediately, surging by 9% as tankers were damaged and shipments were severely disrupted. This disruption fueled anxieties about rising energy costs and their potential impact on the Philippine economy.
Across most sectors, declines were substantial. Services bore the brunt of the downturn, falling by 4.11%, while holding firms and industrials also experienced significant losses. Only the mining and oil sector managed to post gains, driven by investor interest in precious metals as a safe haven.
Investors shifted away from riskier assets, opting instead for commodities like gold and oil, traditionally seen as protective investments during times of geopolitical stress. This “risk-off” sentiment dominated the trading session.
The breadth of the market was overwhelmingly negative, with decliners far outnumbering advancers by a ratio of nearly three to one. Trading volume decreased compared to the previous session, indicating a cautious approach from investors.
Foreign investors, who had been net buyers in the previous session, reversed course and became net sellers, further contributing to the downward pressure on the market. This shift in sentiment underscored the prevailing uncertainty and apprehension.
The day’s trading activity reflected a market deeply sensitive to the unfolding events in the Middle East, highlighting the interconnectedness of global financial markets and geopolitical risks.
