THE peso and stock market both recovered on Wednesday following news that US inflation had cooled and assurances that the domestic banking sector was unlikely to be affected by the failure of two US banks.

The currency strengthened by 13 centavos to P54.95 against dollar, while the benchmark Philippine Stock Exchange added 72.77 points, or 1.14 percent, to close at 6,466.10.

The broader All Shares also advanced, by 24.04 points, or 0.70 percent, to 3,478.52.

"Besides the easing of the US inflation rate, at home the Bangko Sentral ng Pilipinas calmed investors by saying that Philippine banks have no exposure to Silicon Valley Bank (SVB)," said Claire Alviar, research associate at Philstocks Financial Inc.

US inflation slowed to 6.0 last month from 6.4 percent in January, raising hopes that the Federal Reserve (Fed) could ease up on interest rate hikes.

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"The easing of the US February inflation rate may signal that the Federal Reserve will slow down in its monetary tightening. Investors took this as a positive catalyst, especially after the collapse of SVB," Alviar said.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., noted that "US inflation was mostly in line with market estimates."

"Swaps markets are pricing in a Fed rate hike of +0.25 [percentage points] on March 22, 2023, with US overnight indexed swaps pricing in Fed rates to peak at around 4.75 percent at the May 2023 meeting," he added.

Ricafort, however, pointed to offsetting factors such as Moody's Investors Service cutting its outlook for the US banking system to negative from stable and rising geopolitical risks after a Russian fighter jet collided with a US surveillance drone

Regina Capital Development Corp. Managing Director Luis Limlingan, meanwhile, said that "in the Philippines, investors continued to assess the SVB meltdown as the index tried to inch back closer to 6,500.

"On Wednesday (US times), Wall Street will gain more insight into the state of the economy through retail sales and producer price index data due out before the bell," he added.

The peso opened trading at P54.90:$1 and ranged from P54.75 to P54.977. Volume reached $899.7 million, down substantially from $1.127 trillion in the previous session.

At the stock market, sectoral results were mixed despite the overall bounce back. Mining and oil, properties and services closed in the red, dropping by 0.52 percent, 0.44 percent and 0.07 percent, respectively.

Industrials had the biggest gain of 1.76 percent while financials, hammered previously by the US bank failures, closed 1.67 percent higher.

A total of 1.19 billion shares worth P11 billion changed hands.

Advancers won against decliners, 103 to 80, while 48 securities remained unchanged.