MANILA — Philippine shares and the peso closed lower as investors remained wary of upcoming developments, particularly the next policy decision of the US Federal Reserve.

The benchmark Philippine Stock Exchange index (PSEi) dropped 2.20 percent to 5,991.37, while the broader All Shares index slipped 1.47 percent to 3,315.62.

Most sectoral gauges ended the session in the red, with Services posting the biggest decline at 4.22 percent. Financials fell 3.09 percent, followed by Mining and Oil at 0.84 percent, Industrial at 0.62 percent, and Holding Firms at 0.25 percent.

Property was the only sector to register gains, advancing 0.53 percent.

A total of 8.7 billion shares worth PHP10.32 billion changed hands during the trading day. Market breadth remained negative, with 104 decliners outpacing 67 advancers, while 63 stocks closed unchanged.

In a report, Rizal Commercial Banking Corporation Chief Economist Michael Ricafort said investors were monitoring hawkish signals from some US Federal Reserve officials, which supported the US dollar and raised expectations of a possible 25-basis-point interest rate increase by October and another 25-basis-point hike by March next year.

Ricafort said the anticipated rate adjustments could also influence the Bangko Sentral ng Pilipinas and other central banks worldwide to further tighten monetary policy, contributing to investor caution in the equities market.

Meanwhile, the peso weakened to 61.55 against the US dollar from its previous close of 61.35.

The local currency opened at 61.40, lower than Tuesday’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.

Dollar trading volume declined to USD1.76 billion from USD2.3 billion recorded in the previous trading day.