Manila: The Philippine Stock Exchange index (PSEi) and the peso both weakened on Wednesday as investors remained cautious ahead of key developments, particularly the US Federal Reserve's next interest rate decision. The local bourse's benchmark index fell by 2.20 percent to 5,991.37 points, and the broader All Shares index by 1.47 percent to 3,315.62 points.

According to Philippines News Agency, most sectoral indices ended in negative territory, led by Services, which dropped 4.22 percent. It was followed by Financials, down 3.09 percent; Mining and Oil, 0.84 percent; Industrial, 0.62 percent; and Holding Firms, 0.25 percent. Property was the lone gainer, rising 0.53 percent. Trading volume reached 8.7 billion shares valued at PHP10.32 billion. Decliners outnumbered advancers, 104 to 67, while 63 issues were unchanged.

In a report, Rizal Commercial Banking Corporation (RCBC) Chief Economist Michael Ricafort noted that investors took note of the hawkish stance of some US Federal Reserve officials, which strengthened the US dollar and increased expectations of a possible 25-basis-point rate hike by October and another 25-basis-point increase by March next year. Ricafort said these projected rate hikes could also prompt the Bangko Sentral ng Pilipinas (BSP) and other global central banks to tighten monetary policy, contributing to the cautious sentiment in equity markets.

Meanwhile, the peso weakened against the US dollar, closing at 61.55 from 61.35 a day earlier. The local currency opened at 61.40, weaker than the previous day's opening level of 61.16. It traded between 61.35 and 61.63 during the session, with an average exchange rate of 61.55. Volume went down to USD1.76 billion from the previous day's USD2.3 billion.