Manila: A weakening peso dragged the local stock market into negative territory on Wednesday, driven by geopolitical tensions between the United States and Iran.

According to Philippines News Agency, the local currency slipped further to 61.81 against the U.S. dollar from Tuesday's close of 61.78. Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort traced the peso's weakness partly to developments in the US-Iran peace discussions. He noted that this came after US President Donald Trump signaled that no talks are scheduled with the Islamic Republic of Iran, following the expiration of the US-Iran memorandum of understanding on August 17, 2026.

Ricafort added that international crude oil prices also stayed near a three-week high as markets awaited possible unprecedented US economic sanctions against Iran, especially since new peace deals remain elusive. The peso opened the day at 61.85, lower than its 61.63 start in the previous session. It traded between 61.99 and 61.73, bringing the day's average to 61.86. Trading volume reached USD1.89 billion, up from the USD1.34 billion a day ago.

The local currency's weakening triggered a path reversal for the local bourse's main index, which shed 1.70 percent to 6,158.34 points, while the All Shares index dropped 1.29 percent to 3,396.35 points. Luis Limlingan, Regina Capital Development Corporation head of sales, commented that the weaker currency weighed on market sentiment, while broad-based selling reflected continued investor caution. Global market weakness also weighed on sentiment, adding to the pressure on local equities.

All sectoral indices finished in negative territory, led by Services, which fell 2.68 percent. It was trailed by Mining and Oil, down 2.60 percent; Industrial, 1.64 percent; Holding Firms, 1.33 percent; Financials, 1.07 percent; and Property, 0.08 percent. Trading volume declined to 843.72 million shares valued at PHP5.78 billion. Decliners outnumbered advancers, 119 to 74, while 54 shares remained unchanged.