Local stocks rose as benign inflation bolstered the case for the central bank to pivot toward monetary easing, while strengthening peso further lifted investor sentiment.

The Philippine Stock Exchange index (PSEi) gained 9.09 points, or 0.1 percent, to close at 6,382.04 on Thursday, Feb. 5.

Investors are increasingly positioned for a 25-basis-point interest rate cut by the Bangko Sentral ng Pilipinas (BSP) during its upcoming policy meeting on Feb. 19. That optimism follows data showing January consumer prices rose at a relatively benign two percent year-on-year pace.

The benchmark index reached its best performance since Jan. 19, though it finished below its recent intraday peak of 6,494.10 seen earlier this year.

Appetite for local assets was further supported by S&P Global Ratings, which reiterated the potential for a credit rating upgrade for the Philippines to A- from its current BBB+ level, Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael L. Ricafort said.

The currency market mirrored the equity rally, with the peso strengthening 0.5 percent to close at 58.69 per dollar, its firmest level since mid-December.

External tailwinds also played a role as geopolitical tensions showed signs of thawing. Markets are closely monitoring scheduled negotiations between the United States and Iran in Oman, alongside trade discussions between US President Trump and Chinese President Xi Jinping.

Those diplomatic efforts, combined with weaker-than-expected US private sector jobs data, Ricafort said have weighed on global crude oil prices and increased expectations for a US Federal Reserve rate cut later in 2026.

The PSEi has maintained a floor above the 6,000 level since late last year, marking a significant recovery from a five-year low of 5,584.35 recorded in November 2024.

Market participants are now looking toward the potential inclusion of Philippine sovereign debt in the JPMorgan Emerging Market Bond Index as the next major catalyst.

However, Ricafort said domestic governance remains a focal point, with President Ferdinand Marcos Jr. urging lawmakers to fast-track anti-corruption measures, including the Anti-Dynasty Bill and the CADENA Act.

The Federation of Philippine Industries (FPI), meanwhile, described the PSEi rebound as evidence that economic fundamentals are reasserting themselves.

FPI Chairman Emeritus Jesus L. Arranza attributed the resurgence to the administration’s focus on policy over political distractions.

According to Arranza, the market has responded favorably to a “calm and steady” leadership style amidst domestic political noise. The index now faces immediate technical resistance between the 6,400 and 6,500 levels.