BOUNCED BACK. The Philippine Stock Exchange index (PSEi) recovered on Tuesday (Dec. 6, 2022) after a three-day slide amidst expectations for another hike in the Federal Reserve's key policy rates this month. This recovery was tracked by the peso, which improved to 55-level. (PNA file photo)

MANILA – The Philippine Stock Exchange index (PSEi) recovered on Tuesday while the peso ended the day sideways against the United States dollar after improving to 55-level.

After starting the week down, the main equities index rose by 36.1 percent, or 232.25 points, to 6,674.38 points.

All other counters trailed, with All Shares up by 2.17 percent, or 73.79 points, to 3,477.72 points.

Holding Firms led the sectoral gauges after it rose by 4.35 percent and was trailed by Property, 4.18 percent; Financials, 3.15 percent; Mining and Oil, 1.43 percent; Services, 1.30 percent; and Industrial, 1.19 percent.

Volume reached 582.78 million shares amounting to PHP6.04 billion.

Advancers led decliners at 100 to 81, while 46 shares were unchanged.

“Investors shrugged concerns that the Fed (Federal Reserve) will need to hike interest rates for longer than previously anticipated with the intended goal of bring(ing) down inflation following the better-than-expected November ISM (Institute for Supply Management) services data,” said Luis Limlingan, Regina Capital Development Corporation (RCDC) head of sales.

US’ ISM Services index last November exceeded expectations after it reached 56.6. An index of above 50 indicates expansion while it is otherwise for figures below 50.

“Although, the market still broadly expects the Fed to push the rates up again by 50 basis points at its December meeting,” Limlingan said.

On the local front, the Philippine Statistics Authority (PSA) reported earlier in the day another rise in the inflation rate, which posted a faster rate of 8 percent last November, the highest since November 2008.

However, Limlingan said this is a non-event for the local equities trading during the day.

Meanwhile, the local currency ended the day sideways against the US dollar at 55.975 from the previous day’s 56.02.

It opened the day at 56.06, weaker than its 55.74 start in the previous session.

It traded between 56.11 and 55.95, resulting in an average of 56.018.

Volume reached USD776.56 million, lower than the previous day’s USD1.15 billion.

Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said the recovery of the PSEi boosted the peso and the seasonal increase in overseas Filipino workers’ (OFW) remittances.

Ricafort said further acceleration of the domestic inflation rate last November “could lead support (to) recent signals/reiteration of further local policy rate hike of about +0.25 or +0.50 on the next rate setting meeting on December 15, 2022 amid a relatively strong peso exchange rate recently or matching the widely expected +0.50 Fed rate hike on December 14, 2022 if inflation remains relatively high.”

He said immediate resistance level for the local currency is projected to be between 56 to 56.25 while minor resistance is between 56.50 to 57.

For Wednesday, Ricafort forecasts the peso to trade between 55.85 to 56.05. (PNA)