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The latest increase in the Federal Reserve’s key interest rates helped the local stock market on Thursday thanks to risk-on emotions, although the peso fell versus the US dollar.

To reach 6,379.26 points, the Philippine Stock Exchange index (PSEi) increased by 2.28 percent, or 142.50 points.

The All Shares index rose 1.61 percent, or 54.38 points, to 3,424.96 points in the period that followed.

The day’s gains were spread across all the sectoral gauges, with the Financials sector rising the most (3.18%).

Holding Firms, with a 2.70 percent, Services, with a 1.91 percent, Property, with a 1.86 percent, Mining and Oil, with a 1.36 percent, and Industrial, with a 0.95 percent, lagged behind.

567.76 million shares, or a paltry PHP4.73 billion, were traded.

At 140 to 50, more shares advanced than declined, while 40 shares were unchanged.

Following the Federal Open Market Committee meeting on July 26–27, Regina Capital Development Corp.’s head of sales, Luis Limlingan, credited another 75 basis point hike in the Federal Reserve’s benchmark interest rates for the upbeat tone in the local equity market (FOMC).

Markets took note of Fed Chair Jerome Powell’s suggestion of a potential slower tightening at the upcoming FOMC meeting, according to Limlingan, as well as the claim that the US has not entered a recession.

The second-quarter GDP (gross domestic product) estimate, which is scheduled for release on Thursday, will provide investors with further information about the state of the economy, he said.

The peso lost ground against the US dollar, falling from 55.68 to 55.82 at the close on Wednesday.

It opened at 55.58 on the day, down from the previous session’s opening of 55.40, and moved between 55.97 and 55.55, averaging 55.72 for the day.

Volume exceeded Wednesday’s USD1.007 billion by USD1.27 billion.

Michael Ricafort, the chief economist of Rizal Commercial Banking Corp., stated that future increases in the Bangko Sentral ng Pilipinas (BSP) key rates would be heavily influenced by the peso’s performance.

According to Ricafort, the off-cycle 75 basis point hike in the BSP’s benchmark policy rate on July 14 helped to boost the peso in keeping with the framework for inflation targeting used by the central bank.

He added that this would aid in better managing and anchoring both real and anticipated inflation.

On August 18, the Monetary Board, which sets policy at the BSP, will convene to decide on interest rates.

According to Ricafort, the Board is anticipated to raise the key interest rates of the central bank by 25 basis points to 50 basis points.

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