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PHILIPPINE SHARES dropped further on Monday, dragging the main index to a two-month low, due to worsening conflict in the Middle East after the United States attacked Iran over the weekend.

The bellwether Philippine Stock Exchange index (PSEi) sank by 1.91% or 121.49 points to close at 6,218.28, while the broader all shares index went down by 1.43% or 54 points to 3,706.56.

This was the PSEi’s lowest close in nearly two months or since its 6,158.48 finish on April 24.

“The local market dropped as investors reacted to the escalation of the Israel-Iran conflict upon the involvement of the United States,” Philstocks Financial Inc. Research Manager Japhet Louis O. Tantiangco said in a Viber message. “Investors dealt with the economic repercussions of the escalation, including the outlook of higher oil prices and the depreciation of the peso. This comes amid Iran’s plan of blocking the Strait of Hormuz where a significant amount of oil shipments go through.”

“Philippine shares were sold down on Monday back to 6,200 level, tracking the broader market, as Middle East tensions continued with US President Donald J. Trump further fueling tensions as the US enters the war,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan likewise said in a Viber message.

Iran said on Monday that the US attack on its nuclear sites expanded the range of legitimate targets for its armed forces and called Mr. Trump a “gambler” for joining Israel’s military campaign against the Islamic Republic, Reuters reported.

Iran’s most effective threat to hurt the West would probably be to restrict global oil flows from the Gulf. Oil prices spiked on Monday at their highest since January.

Attempting to strangle the strait could send global oil prices skyrocketing, derail the world economy and invite conflict with the US Navy’s massive Fifth Fleet that patrols the Gulf from its base in Bahrain.

At home, all sectoral indices closed lower on Monday. Mining and oil plummeted by 3.48% or 359.28 points to 9,952.07; services dropped by 2.56% or 56.75 points to 2,155.76; financials sank by 2.4% or 55.80 points to 2,265.08; holding firms retreated by 1.93% or 105.23 points to 5,325.96; industrials declined by 1.67% or 152.39 points to 8,940.43; and property went down by 0.54% or 12.04 points to 2,203.29.

“Only three index members closed with gains led by Manila Electric Co., rising 0.83% to P546. Puregold Price Club, Inc. was the worst index performer, dropping 5.07% to P33.70,” Mr. Tantiangco said.

Value turnover shrank to P6.29 billion on Monday with 1.03 billion shares traded from the P12.27 billion with 1.32 billion issues exchanged on Friday.

Decliners overwhelmed advancers, 142 versus 60, while 44 names were unchanged.

Net foreign buying reached P108.27 million on Monday versus the P835.44 million in net selling recorded on Friday. — Revin Mikhael D. Ochave with Reuters