MANILA, Philippines — The Philippine stock market suffered another sharp setback on Friday as rising borrowing costs, elevated oil prices and persistent economic uncertainty pushed the benchmark Philippine Stock Exchange index (PSEi) below the closely watched 5,900 level.
The PSEi fell to 5,879.72, down 78.92 points or 1.32 percent, according to end-of-day market data. The decline came after the index had already struggled to regain the 6,000 mark following a string of volatile sessions.
The latest sell-off underscores the growing pressure on Philippine assets as investors contend with a combination of higher yields, expensive crude oil, currency weakness and renewed concerns about inflation and interest rates.
Oil shock adds to market pressure
Oil remains one of the biggest concerns for the Philippine economy because the country is a net importer of petroleum.
Global crude prices surged above the $100-per-barrel threshold earlier in the week amid continuing geopolitical tensions and disruptions to energy supplies. Reuters reported Friday, however, that oil prices had eased by about 2 percent as concerns over Saudi supply disruptions began to moderate. Brent crude was reported at around $102.68 a barrel, while US West Texas Intermediate stood near $100.08.
Despite the latest decline in crude prices, oil remains substantially elevated compared with levels seen earlier in the year, keeping inflation and external-balance concerns in focus.
For the Philippines, prolonged high oil prices can increase the country’s import bill, place additional pressure on the peso and raise transportation and production costs.
Rising yields create another headache
Higher bond yields are also making investors more cautious.
When government bond yields rise, fixed-income investments can become relatively more attractive while the cost of borrowing across the economy can increase. That environment can weigh on equities, particularly when investors are already worried about corporate earnings and economic growth.
BusinessWorld previously reported that Philippine shares had been under pressure from global volatility and the economic effects of the Middle East conflict.
Reuters has likewise highlighted a broader global concern: rising energy prices and higher borrowing costs are increasing the risk of renewed inflation and slower growth at the same time.
The peso remains part of the problem
The Philippine peso has also been under sustained pressure.
Earlier this week, the currency touched another record low, with the peso reaching P62.86 per US dollar, as oil prices, global interest-rate expectations and geopolitical risks weighed on sentiment. The Philippine Star reported that the weaker currency was contributing to investor risk aversion alongside elevated crude prices.
A weaker peso can make imported oil and other dollar-priced commodities more expensive in local-currency terms, potentially adding to inflationary pressure.
That creates a difficult environment for policymakers because stronger measures to contain inflation can also affect borrowing costs and economic activity.
The market had already been losing ground
The latest decline follows a series of volatile trading sessions.
On Sept. 16, the PSEi dropped 1.11 percent to 6,007.78, with investors worried about continued peso weakness and elevated oil prices.
A day later, the index slipped another 1.51 percent to 5,916.94, falling below the 6,000 psychological threshold. The Philippine Star reported that investors were increasingly concerned about slower third-quarter economic growth, inflation risks, geopolitical uncertainty and the direction of US monetary policy.
The market briefly staged a rebound on Thursday, climbing 0.70 percent to 5,958.64 as investors hunted for bargains. But the recovery failed to push the index back above 6,000, with analysts noting that uncertainty remained elevated.
That rebound was followed by Friday’s renewed selling pressure.
What investors are watching now
The breach of 5,900 places the PSEi at another important psychological level after the index spent much of the recent period moving between the 6,000 and 6,100 areas.
The Philippine Stock Exchange’s market data showed the index trading below 5,900 during Friday’s session, confirming the heightened volatility in local equities.
Market participants are now closely watching several factors:
- Global oil prices and whether crude remains above $100 a barrel;
- Philippine government bond yields and borrowing costs;
- The peso-dollar exchange rate;
- Inflation expectations;
- US Federal Reserve policy and its effect on global capital flows;
- Geopolitical developments in the Middle East; and
- Philippine economic growth prospects.
The combination matters because these factors can reinforce one another. Higher oil prices can increase inflation pressure; inflation can influence interest-rate expectations; higher rates can lift yields; and stronger global yields can make emerging-market assets less attractive.
Global markets face the same inflation dilemma
The Philippine market’s weakness is also part of a broader global story.
Reuters reported that financial markets are increasingly confronting the possibility of a renewed stagflationary environment, in which energy costs remain elevated while economic growth faces pressure. Rising oil prices have forced investors to reassess expectations for central-bank policy, while government bond yields have also moved higher.
For Philippine investors, the challenge is amplified by the country’s exposure to imported energy and movements in the peso.
The PSEi’s move below 5,900 therefore reflects more than a single day’s selling. It comes after several sessions of pressure tied to inflation, currency movements, interest rates and geopolitical uncertainty.
For now, investors are left watching whether the market can stabilize around the latest levels—or whether another wave of external shocks will keep Philippine stocks under pressure.
