Stock market, peso lifted as inflation slows to 2.8%

THE peso and the stock market both rose on Tuesday following news that inflation had markedly slowed in January.

The currency strengthened by 9 centavos to P56.20 against the dollar, while the benchmark Philippine Stock Exchange index (PSEi) added 27.04 points, or 0.4 percent, to end the day at 6,755.26.

The broader All Shares index also advanced, by 13.91 points or 0.39 percent, to 3,539.05.

The peso opened trading at P56.37:$1 and ranged from P56.14 to P56.39. Volume reached P1.259 billion, up from P1.083 billion at the start of the week.

Rizal Commercial Banking Corp. chief economist Michael Ricafort noted that the peso gained strength after inflation slowed to 2.8 percent, the lowest in more than three years or since October 2020.

“The peso also strengthened versus the US dollar after the continued gains in the local stock market to new highs,” he added.

Mikhail Plopenio, researcher at Philstocks Financial Inc., said investors cheered inflation as it settled at the lower end of the central bank’s estimate at 2.8 percent and fell further within the 2.0- to 4.0-percent target.

“Adding to the positive sentiment was the report from Moody’s Analytics, wherein it sees the Philippine economy performing better in the second half of the year amid cooling inflation and declining interest rates,” he added.

Regina Capital Development Corp. Managing Director Luis Limlingan said the lower inflation print helped local shares “overcome the weaker sentiment from the US.”

Limlingan and Ricafort both said the inflation result also fueled expectations that the Bangko Sentral ng Pilipinas would start cutting interest rates later this year.

Market participation improved, resulting in a value turnover of P4.61 billion – higher than the year-to-date average of P4.47 billion.

Foreigners were net buyers, registering a net inflow of P44.45 million.

Except for financials, which dropped by 0.47 percent, all sector indices closed in green territory. Services had the biggest gain of 1.16 percent.

Advancers and decliners tallied 93 apiece, while 57 were unchanged.