Market Rout: PSEi Plummets 2.08% as Q4 GDP Slump Spooks Investors
The Philippine Stock Exchange (PSEi) suffered a heavy blow on Thursday, January 29, 2026, as the local market bucked a relatively stable global trend to stage a dramatic sell-off. The benchmark index plunged 2.08 percent (or 132.42 points), closing at 6,223.36.
At the GME Academy, we often tell our students that "The tape never lies." While Wall Street remained largely sideways, the Philippine market reacted with "Value-Based Realism" to a combination of disappointing domestic growth and a resurgent US Dollar. For Forex Traders, the slide in the PSEi is a "risk-off" signal that often precedes further pressure on the Philippine Peso (PHP).
1. The GDP Gut-Punch
The primary catalyst for the rout was the release of the Q4 2025 GDP figures. As we highlighted in our previous coverage, growth slowed to a post-pandemic low of 3 percent.
Michael Ricafort, chief economist at RCBC, noted that the full-year 2025 growth of 4.4 percent represents the weakest performance since the catastrophic 2020 contraction. Investors who had priced in a late-year recovery were forced to aggressively re-evaluate their positions, leading to a "liquidity exit" that saw decliners outpace advancers 124 to 75.
2. Sectoral Spotlight: Banking Bleeds, Gold Gleams
The sell-off was broad-based, but certain sectors felt the heat more than others:
Banking (-2.49%): The financial sector led the decline. In Forex Trading, banking stocks are often viewed as a proxy for the economy. When GDP slows, the risk of bad loans (NPLs) rises, and the prospect of BSP rate cuts threatens bank margins.
Consumer Stocks: Century Pacific Food Inc. was the session’s "laggard," plunging 5 percent to P38.00 as investors feared a slowdown in household consumption.
The Mining Exception (+1.17%): The only green shoot was the Mining and Oil sector. This was driven by skyrocketing gold prices, which are currently benefiting from global geopolitical uncertainty. Alliance Global Group Inc. also defied the trend, gaining 1.53%.
3. The Fed Factor and the Peso's Slide
Adding fuel to the fire was the US Federal Reserve’s decision to hold interest rates steady. This "Hawkish Hold" kept the US Dollar strong, causing the Philippine Peso to lose ground.
Japhet Tantiangco, research manager at Philstocks Financial, explained that the depreciating peso prompted foreign investors to pull out P406.24 million in net outflows. For a foreign investor, a weakening peso eats into their stock market gains, making Philippine equities a "double-loss" scenario during a currency slide.
4. The "Governance Catalyst."
Despite the grim numbers, there is a silver lining. Ricafort emphasized that the market's recovery now hinges on governance. If the government's anti-corruption drive—particularly the probes into the flood control scandal—results in higher governance standards and more efficient spending in 2026, it could act as the "missing catalyst" to restore investor faith.
The GME Academy Analysis: Trading the "Fear"
In Forex Trading for Beginners, we teach that equity markets and currency markets are two sides of the same coin. When the PSEi falls 2%, it usually means big institutions are converting their Pesos back into Dollars to seek safety elsewhere.
Are You Prepared for the Next Support Level? The 6,200 level is now a critical psychological floor for the PSEi. If it breaks, the USD/PHP could see a fresh surge toward the 58.50 level.
Join our FREE Forex Workshop. Learn how to use "Intermarket Analysis" to predict currency moves by watching the stock market. We’ll show you the exact leading indicators that professional traders use to spot a PSEi reversal before it happens.
