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PSEi surpasses 6,400 as US stocks rise and the peso depreciates.

The local stock barometer rose on Wednesday due to the overnight increase in US markets, while the peso fell against the dollar.

To reach 6,445.01 points, the Philippine Stock Exchange index (PSEi) increased by 2.14 percent, or 135.02 points.

All Shares increased by 1.30 percent, or 44.20 points, to 3,442.90 points in the period that followed.

The Holding Firms index, which increased by 3.75 percent during the day, led the gains for the majority of the sectoral gauges.

Industrial, 2.18 percent, Services, 1.69 percent, Property, 1.28 percent, and Financials, 0.03 percent lagged it in importance.

After falling by 1.42 percent, the Mining and Oil index was the only one to lose during the day.

915.72 million shares, or PHP5.32 billion, in thin volume.

At 114 to 71, more shares advanced than declined, while 47 were unchanged.

Falling US bond yields, according to Luis Limlingan, head of sales at Regina Capital Development Corporation (RCDC), benefited growth stocks.

This comes after the US Treasury yield on the 10-year note dropped below the yield on the two-year note on Tuesday, a development he claimed “had a solid historical track record as a recession signal.”

He remarked, referring to the US economy, that “the so-called yield curve inversion has historically been a warning indication that the economy may be sliding or has already slipped into recession.”

The release of the Federal Open Market Committee (FOMC) meeting minutes from last June and the most recent Mortgage Bankers Association mortgage purchase index, among other things, will be on the minds of investors, he added.

In the meantime, the local currency declined from its end of 55.23 a day earlier to close the day at 55.67 versus the US dollar, its lowest since ending at 55.71 on October 20, 2005.

It started the day at 55.42, a significant decline from the previous session’s opening price of 55.00.

The price fluctuated between 55.42 and 55.72, bringing the average for the day to 55.574.

Volume was USD1.25 billion, down from USD1.29 billion the day before.

Michael Ricafort, the chief economist at Rizal Commercial Banking Corporation (RCBC), attributed the peso’s depreciation in part to the strengthening of the US dollar and risk aversion due to concerns about the possibility of a US economic recession.

He claimed that investors’ concerns were also fueled by expectations of future increases in the Federal Reserve’s key interest rates to combat the country’s four-decade-high inflation rate.

However, according to Ricafort, these factors are offset by the fact that oil prices have dropped to below $100 per barrel on the global market and that other commodities have experienced a similar development. This is because markets have already factored in the possibility of a US economic slowdown or even recession, which could help the nation import less oil and other major global commodities.

He said that the peso’s negative effects were attenuated by the local stock market’s surge.

According to Ricafort, the currency pair will trade on Thursday in the range of 55.50 and 55.75.

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