SHARES improved on Tuesday on last-minute bargain hunting despite concerns over the policy paths of the Bangko Sentral ng Pilipinas (BSP) and US central bank due to rising inflation here and abroad.

The benchmark Philippine Stock Exchange index (PSEi) went up by 7.52 points or 0.11% to close at 6,474.53 on Tuesday, while the broader all shares index lost 3.88 points or 0.11% to 3,471.05.

“Last-minute bargain hunting sent the local market higher this Tuesday. For the most part of the day however, the bourse was in the negative territory amid the pessimistic spillovers from Wall Street caused by worries that the Federal Reserve will take aggressive measures in their policy meeting this week in light of the US’ latest inflation print,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco  said in a Viber message.

Regina Capital Development Corp. Head of Sales Luis A. Limlingan added that investors are bracing themselves for the possibility of a larger-than-expected interest rate hike from the Fed.

The US consumer price index increased by a faster-than-expected 8.6% last month, the largest year-on-year increase since December 1981, according to US Labor department data released on Friday, showing inflation has yet to peak.

This caused renewed bets of aggressive action from the Fed at its June 14-15 meeting that could dampen growth prospects for the world’s largest economy.

The US central bank kicked off its tightening cycle with a 25-basis-point (bp) increase in March followed by a 50-bp hike last month as inflation continued to reach multi-year highs.

Meanwhile, First Metro Investment Corp. Head of Research Cristina S. Ulang said the market was affected by the “dovish” messaging from the BSP about a planned reserve requirement ratio (RRR) cut by yearend, which she said assumes “inflation normalization.”

BSP Governor Benjamin E. Diokno chief on Monday signaled they would reduce banks’ RRR by October or November as part of its efforts to manage inflation and as the central bank continues to unwind the accommodations it made for lenders at the height of the pandemic in 2020.

The majority of the sectoral indices ended in the red, except for holding firms, which gained by 97.35 points or 1.64% to 6,025.78, and mining and oil, which rose by 80.94 points or 0.70% to 11,624.43.

Meanwhile, property declined by 29.32 points or 0.96% to 3,015.59; industrials fell by 78.86 points or 0.87% to 8,974.70; services went down by 13.24 points or 0.75% to 1,740.52; and financials gave up by 2.30 points or 0.14% to end at 1,559.68.

Decliners overwhelmed advancers, 118 versus 62, while 44 names ended unchanged.

Value turnover grew to P5.60 billion with 827.41 million shares changing hands from the P5.38 billion with 761.72 million issues seen on Monday.

Net foreign selling ballooned to P1.25 billion from the P624.30 million recorded on the previous trading day. — L.M.J.C. Jocson