UP. Amidst inflation concerns, among others, the Philippine Stock Exchange index (PSEi) recovered and finished Wednesday (Feb. 1, 2023) up. The local currency gained against the US dollar even ahead of the rate decision announcement by the Federal Reserve. (PNA graphics)

MANILA – Risk-on sentiments returned to the local financial market on Wednesday amid inflation concerns, among others, and allowed both the main equities index and the peso to close the day with gains.

After several days of slide, the Philippine Stock Exchange index (PSEi) rose by 3.57 percent, or 242.51 points, to 7,035.76 points.

All Shares followed after it increased by 2.70 percent, or 96.77 points, to 3,687.17 points.

The sectoral gauges were led by Services after it jumped by 4.34 percent.

It was trailed by Holding Firms, 3.69 percent; Industrial, 3.14 percent; Property, 2.79 percent; Financials, 2.74 percent; and Mining and Oil, 0.73 percent.

Volume reached 1.06 billion shares amounting to PHP8.99 billion.

Advancers led decliners at 143 to 49 while 43 shares were unchanged.

“Philippine shares climbed as traders assessed how firms are faring amid high inflation and fears of slowing consumer spending,” said Luis Limlingan, Regina Capital Development Corporation (RCDC) head of sales.

Limlingan said United States equities ended the year’s first month “on a good note, as strong earnings and encouraging inflation data pushed the indices to their best levels since January 2019.”

Meanwhile, oil prices in the international market were “steady after recovering from a near three-week low, drawing support from a weakening dollar and data showing that demand for US crude and petroleum products rose in November.”

Limlingan said Brent crude futures was up by a percent to USD85.46 a barrel and the West Texas Intermediate (WTI) by 1.3 percent to USD78.87 a barrel.

The local currency also gained against the US dollar after finishing the day at 54.475 from the previous day’s 54.64 close.

It opened the day at 54.655 and traded between 54.67 and 54.475. The average level for the day stood at 54.591.

Volume increased to USD958.9 million from day-ago’s USD984.31 million.

Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort traced to correction the peso’s performance during the day partly due to the improvement in the local bourse’s main index.

Ricafort also cited as factors for the positive sentiment in both the local and US financial markets the easing of US wage inflation, which registered its slowest expansion in 1.5 years in the last quarter of 2022 at 1 percent, and the slowest increase of US’ home prices last November at 9.2 percent year-on-year.

These factors, he said, are expected to have contributed to expectations for smaller hikes in the Federal Reserve’s key rates, which is scheduled to be announced later in the day after the Federal Open Market Committee’s (FOMC) two-day meeting that started on Jan. 31.

Improvement in China’s January 2023 manufacturing Purchasing Managers Index (PMI) to 50.1, which indicates expansion and is the first in four months, along with the rise in Philippine manufacturing PMI for the third consecutive month last January to 53.5, also contributed to the positive sentiments, he said.

For Thursday, the local currency is expected to trade between 54.40 and 54.60 against the US dollar. (PNA)