MANILA – The main stock gauge started the week up on investors’ anticipation for another increase in the Federal Reserve’s key rates in May, but the peso weakened against the US dollar.

After a slump at the end of last week’s trading, the Philippine Stock Exchange index (PSEi) recovered and jumped by 0.32 percent, or 22.24 points, to 7,020.83 points.

All Shares finished sideways after a rise of 0.03 percent, or 1.20 points, to 3,722.80 points.

However, most of the sectoral gauges fell during the day, namely Mining and Oil, 5.14 percent; Financials, 0.89 percent; Industrial, 0.65 percent; Services, 0.11 percent; and Property, 0.02 percent.

Only the Holding Firms index gained during the day after it increased by 1.34 percent.

Volume was thin at 650.1 million shares amounting to PHP4.52 billion.

Decliners surpassed advancers at 127 to 54, while 47 shares were unchanged.

“Philippine shares reversed losses from last Friday as investors continued to weigh the likelihood of a 50 bps (basis points) rate hike in May and as they braced for a slew of corporate earnings this week, including Amazon, Apple, Google-parent Alphabet, Meta Platforms, and Microsoft,” said Luis Limlingan, Regina Capital Development Corporation (RCDC) head of sales.

Aside from earnings reports both here and overseas, Limlingan said investors are also on the lookout for the release of the personal consumer expenditures index in the US on Friday, as well as the domestic bank lending and the March 2022 fiscal performance reports.

Meanwhile, the local currency finished the day’ trade at 52.41 from 52.315 Friday last week.

It opened the day at 52.38 and traded between 52.48 and 52.38.

The average level for the day stood at 52.428.

Volume totaled to USD726 million, a big drop from the previous session’s USD1.28 billion.

Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort, in a reply to e-mailed questions from the Philippine News Agency, said the peso closed to its weakest in a month “after more aggressive Fed rate hike signals from Fed officials and priced in the markets recently.”

Ricafort said that after the 0.25-percent increase in the Fed’s key rates last March, markets expect the Fed to implement a 0.50-percent hike in May, 2-percent hike in September and 2.50-percent increase by end-2022 “thereby leading to new two-year highs for the US dollar vs. major global currencies.”

To date, the Fed’s key rate is between 0.25 to 0.50 percent, with the hike last March the first since December 2018.

“Peso (is) also weaker as US stock markets posted new one-month highs as higher US/global interest rates could slow down the economic recovery in a deliberate manner to better rein in/control elevated inflation,” Ricafort said.

He forecasts the peso to trade between 52.30-52.45 to a US dollar on Tuesday. (PNA)