PSEi sinks to one-month low on US-Iran strikes

Philippine stocks slid to a one-month low on Thursday as the United States and Iran exchanged strikes, putting their fragile truce at risk and reigniting inflation concerns.

The Philippine Stock Exchange index (PSEi) fell by 1.73% or 103.30 points to close at 5,859.94, while the broader all shares index went down by 1.37% or 45.99 points to end at 3,307.95.

This was the PSEi’s worst finish in nearly a month or since it closed at 5,833.64 on April 30.

“The Philippine market closed lower as fresh exchanges of strikes between the US and Iran renewed concerns over the fragile ceasefire in the Middle East, dampening investor sentiment. Rising oil prices also weighed on the market, prompting broad-based selling pressure across sectors,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message. “Investors remained cautious amid fears that prolonged geopolitical tensions could further fuel inflationary risks and market volatility.”

“The local bourse sank in anticipation of unfavorable US core inflation and gross domestic product growth print amid ongoing Mideast war, as stalled peace talks prolong uncertainty around the recovery of global oil supply,” AP Securities, Inc. said in a market note.

Iran’s Revolutionary Guard targeted a US airbase on Thursday after the US military carried out what a Washington official said were strikes on an Iranian drone operation near the Strait of Hormuz, hours after President Donald J. Trump rejected a report he was close to a compromise deal with Tehran, Reuters reported.

The escalation in hostilities highlighted threats to the tenuous ceasefire between the US and Iran that took effect in early April, dampening hopes for a peace deal and sending oil prices surging again.

Oil prices, having fallen 5% on Wednesday, rebounded after reports of the escalation in hostilities. US crude futures gained more than 3%, while stocks fell and the dollar rose.

Mr. Trump has repeatedly said the end of the war is close but told media at a cabinet meeting on Wednesday he was not yet satisfied on a deal with Iran and the US was not discussing easing sanctions on it.

All sectoral indices closed in the red. Holding firms slid by 2.61% or 118.70 points to 4,417.13; mining and oil sank by 2.44% or 443.37 points to 17,714.71; financials dropped by 1.94% or 35.04 points to 1,770.58; services fell by 1.41% or 42.10 points to 2,924.36; property retreated by 1.21% or 23.27 points to 1,895.3; and industrials dropped by 0.68% or 58.33 points to 8,437.18.

Decliners overwhelmed advancers, 128 to 61, while 51 names closed unchanged.

Value turnover rose to PHP 5.65 billion on Thursday with 718.18 million shares traded from the PHP 5.05 billion with 734.52 million issues that changed hands on Tuesday.

Net foreign selling decreased to PHP 517.08 million from PHP 820.16 million. — Alexandria Grace C. Magno with Reuters