Manila: Expectations for additional cuts in the Bangko Sentral ng Pilipinas' (BSP) key rates resulted in gains of both the local bourse's main index and the peso on Tuesday. The Philippine Stock Exchange index (PSEi) increased by 0.13 percent to 6,433.60 points, while the All Shares index rose by 0.11 percent to 3,784.17 points.

According to Philippines News Agency, despite the overall positive performance, most sectoral indices ended in the red, except for Services, which rose by 0.77 percent, and Holding Firms, which increased by 0.66 percent. The Mining and Oil sector led the decliners with a drop of 0.43 percent, followed by Financials at 0.36 percent, Property at 0.26 percent, and Industrial at 0.02 percent.

The trading volume increased to 1.06 billion shares, amounting to PHP6.96 billion. Advancers outnumbered decliners at 104 to 96, with 56 shares unchanged. Luis Limlingan, head of sales at Regina Capital Development Corporation, noted that local shares closed higher due to dovish expectations on the BSP's policy stance following soft June inflation data.

The Philippine Statistics Authority reported a slight uptick in the domestic inflation rate to 1.4 percent from the previous month's 1.3 percent, marking the lowest since November 2019. Despite this increase, the average inflation for the first half of the year remains below the central bank's target band of 2 percent to 4 percent, which analysts suggest allows monetary officials the flexibility to further cut rates.

The BSP has reduced its key rates by a total of 50 basis points this year, bringing the target reverse repurchase (RRP) rate to 5.25 percent. With additional rate cut projections, the local currency strengthened against the US dollar, improving to 56.35 from the previous day's close of 56.68. The peso opened the day at 56.55, which was also its weakest point for the day, and strengthened to 56.35 mid-day, resulting in an average of 56.44.

The volume of currency trading rose to USD1.67 billion, compared to Monday's USD1.53 billion.