STOCKS climbed further on Tuesday on bargain hunting and despite the release of data showing headline inflation was at a near four-year high in June.

The bellwether Philippine Stock Exchange index (PSEi) rose by 126.37 points or 2.04% to close at 6,309.99 on Monday, while the broader all shares index went up by 50.24 points or 1.50% to 3,398.70.

“I think the market bounce today was due to bargain hunting of selected stocks despite inflation print at 6.10%,” IB Gimenez Securities, Inc. Research Head Joylin F. Telagen said in an e-mail on Tuesday.

“Despite June headline inflation coming in at a four-year high, the PSEi closed higher today, indicating that this has largely been priced in by the market as it looks ahead to the release of Q2 earnings,” RCBC Securities, Inc. Head of Research Erwin Rommel C. Fuentes said in an e-mail on Tuesday.

“We expect the BSP (Bangko Sentral ng Pilipinas) to signal policy rate hikes by as much as 50 bps (basis points) in the next rate-setting meeting to mitigate the risk of second-round effects from higher wages and transportation fares. We believe this will be met positively by the market given the central bank’s dovish stance on inflation thus far,” Mr. Fuentes said.

Diversified Securities, Inc. Equity Trader Aniceto K. Pangan said in a text message that the “market sustained its uptrend as softening of US economic data last Friday manifested a possible reduction of overnight rates by the fourth quarter this year.”

Headline inflation in June surged by 6.1% year on year from 5.4% in May and 4.1% a year ago amid higher food and transport costs, preliminary data from the Philippine Statistics Authority released on Tuesday showed.

The June headline print is a near four-year peak, matching the pace recorded in November 2018 and was the fastest since the 6.9% logged in October 2018.

Year to date, inflation has averaged 4.4%, higher than the 4% seen in the same period a year ago but lower than the central bank’s 5% forecast for the year.

On Tuesday, BSP Governor Felipe M. Medalla said in a Bloomberg Television interview that a hike of at least 25 bps is guaranteed at their Aug. 18 meeting, but he is also open to a bigger increase of up to 50 bps.

All sectoral indices ended in the green. Property climbed by 95.93 points or 3.40% to 2,910.61; financials gained 36 points or 2.44% to finish at 1,510.58; industrials went up by 172.15 points or 1.90% to 9,232.38; holding firms increased by 84.95 points or 1.47% to 5,852.99; mining and oil jumped by 128.05 points or 1.14% to 11,304.05; and services added 13.08 points or 0.78% to end at 1,670.19.

Value turnover increased to P3.98 billion on Tuesday with 509.22 million issues switching hands from the P3.85 billion with 499.98 million shares seen on Monday.

Advancers outnumbered decliners, 119 against 71, while 46 names closed unchanged.

Net foreign selling decreased to P146.06 million from the P613.26 million recorded the previous trading day.

IB Gimenez Securities’ Ms. Telagen put the PSEi’s support at 6,138 and resistance at 6,378. — Justine Irish DP. Tabile