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PH stocks index rises but the peso finishes flat.

On Tuesday, the Philippine Stock Exchange index (PSEi) rose, while the peso’s performance versus the US dollar improved to a 55-level before the day’s close.

The main equity index increased by 36.1 percent, or 232.25 points, to 6,674.38 points after beginning the week lower.

All Shares led all other counters, rising 73.79 points, or 2.17 percent, to 3,477.72 points.

After increasing by 4.35 percent, Holding Firms led the sectoral gauges, followed by Property (4.18 percent), Financials (3.15 percent), Mining and Oil (1.43 percent), Services (1.30 percent), and Industrial (1.19 percent).

582.78 million shares, or PHP6.04 billion, were traded.

At 100 to 81, more shares advanced than declined, while 46 were unchanged.

Following the better-than-expected November ISM (Institute for Supply Management) services data, investors dismissed worries that the Fed (Federal Reserve) will need to raise interest rates for longer than initially anticipated in order to reduce inflation, according to Luis Limlingan, head of sales at Regina Capital Development Corporation (RCDC).

The US ISM Services index, which reached 56.6 in November, exceeded forecasts. When the index is above 50, expansion is indicated; when it is below 50, the opposite is true.

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

On the domestic front, the Philippine Statistics Authority (PSA) earlier in the day announced yet another increase in inflation, which last November reached an even higher rate of 8%, the most since November 2008.

Limlingan asserted that this is a non-event for daytime trading of local stocks.

The local currency fluctuated throughout the day against the US dollar, ending at 55.975 as opposed to 56.02 the day before.

It started the day at 56.06, which was lower than the previous session’s opening price of 55.74.

It fluctuated between 56.11 and 55.95, averaging 56.018.

Volume was USD 776.56 million, down from USD1.15 billion the day before.

Michael Ricafort, chief economist of Rizal Commercial Banking Corporation (RCBC), claimed that the rebound of the PSEi bolstered the peso and the seasonal surge in remittances from overseas Filipino workers (OFWs).

According to Ricafort, if domestic inflation continues to increase at its current rate, it “could lead support to recent signals/reiteration of a 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” or match the widely anticipated +0.50 Fed rate hike on December 14, 2022.

According to him, the local currency’s immediate resistance level is expected to be between 56 and 56.25, while minor resistance is between 56.50 and 57.

According to Ricafort, the peso will trade on Wednesday between 55.85 and 56.05.

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