The Philippine Stock Exchange index (PSEi) edged higher by 0.08 percent on Tuesday to close at 6,353.63, as sentiment was buoyed by the further deceleration of inflation in July and growing optimism surrounding the Bangko Sentral ng Pilipinas’ (BSP) policy direction.

While the local bourse moved sideways for much of the session, the decline in inflation fueled hopes of a possible easing cycle by the BSP. Gains were further supported by positive cues from Wall Street, where all major indices rallied overnight.

"Companies are still releasing their first-half earnings results, which play a significant role in shaping investor sentiments and influencing the broader market’s direction," said Luis Limlingan, Head of Sales at Regina Capital Development Corporation. 

“Investors found a reason to be optimistic, pushing past recent tariff anxieties and reacting to expectations of what the central bank may do with interest rates.”

However, overall market activity remained subdued as investors adopted a wait-and-see stance ahead of the country’s second-quarter gross domestic product (GDP) report due later this week. Net value turnover was tepid at P4.57 billion, reflecting the cautious mood. Foreign investors were net sellers, with outflows totaling P153.30 million.

Sectoral performance was mixed. Property led gainers with a 1.02 percent rise, riding on expectations that lower interest rates would boost real estate activity. In contrast, the banking sector fell by 1.19 percent, amid concerns that further policy easing could squeeze lenders’ net interest margins.

Market breadth was slightly positive, with 93 advancers outpacing 86 decliners.

Meanwhile, the peso weakened against the US dollar, closing at P57.63 from P57.29 in the previous session, according to data from the Bankers Association of the Philippines.