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On Wednesday, amid concerns about inflation and other factors, risk-on sentiments returned to the local financial market, causing the main equity index and the peso to both conclude the day higher.

The Philippine Stock Exchange index (PSEi), which had been declining for several days, increased by 3.57 percent, or 242.51 points, to reach 7,035.76 points.

All Shares came next, rising 96.77 points, or 2.70 percent, to 3,687.17 points.

Services lead the sectoral indices after increasing by 4.34 percent.

Holding Firms (3.69%), Industrial (3.14%), Property (2.79%), Financials (2.74%), and Mining and Oil (0.73%) lagged behind it.

1.06 billion shares, or PHP8.99 billion, were traded.

At 143 to 49, more shares advanced than fell, while 43 were unchanged.

According to Luis Limlingan, head of sales at Regina Capital Development Corporation (RCDC), “Philippine equities increased as dealers assessed how firms are faring amid high inflation and concerns of decreasing consumer spending.”

United States equity markets concluded January “on a positive note, as robust earnings and favorable inflation data lifted the indices to their best levels since January 2019,” according to Limlingan.

A weaker dollar and information indicating increased demand for US crude and petroleum products in November helped keep oil prices stable on the international market as they recovered from a nearly three-week low.

West Texas Intermediate (WTI) crude futures increased by 1.3 percent to USD78.87 per barrel, according to Limlingan, while Brent crude futures increased by 1% to USD85.46 per barrel.

The local currency increased in value in relation to the US dollar as well, closing the day at 54.475 as opposed to the previous day’s end of 54.64.

It fluctuated between 54.67 and 54.475 and started the day at 54.655. For the day, the average level was 54.591.

Volume increased from USD984.31 million to USD958.9 million from the previous day.

Michael Ricafort, chief economist of Rizal Commercial Banking Corporation (RCBC), attributed the adjustment in the peso’s performance during the day to an improvement in the primary index of the local stock exchange.

Ricafort also cited 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 in US home prices last November at 9.2 percent year-over-year as contributing factors for the positive sentiment in both the local and US financial markets.

He claimed that as a result of these variables, the Federal Open Market Committee (FOMC), which met for two days beginning on January 31, is expected to publish a lesser increase in key interest rates later that day.

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

The projected range for the local currency’s price against the US dollar on Thursday is between 54.40 and 54.60.

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