The Philippine Stock Exchange Index (PSEi) extended its rebound on Tuesday, surging 1.95 percent to 5,912.69, while the peso also strengthened to P61.67 per US dollar from P61.74 previously, as improving sentiment over inflation and energy prices lifted both equities and the local currency.

Investors continued bargain hunting following last week’s broad market selloff. Sentiment was further supported by substantial reductions in domestic fuel prices, with gasoline and diesel posting significant per-liter price cuts on Tuesday, reinforcing expectations that inflationary pressures could ease in the coming months.

Analysts also said investors welcomed plans by government officials and agencies to establish a strategic petroleum reserve, a move aimed at strengthening the country’s energy security amid heightened geopolitical risks in the Middle East.

Despite the strong market advance, trading activity remained relatively subdued, with net value turnover reaching P6.06 billion, slightly below the year-to-date average of P6.38 billion. Foreign investors turned net buyers, posting P628.73 million in net inflows, a notable reversal from the previous session’s outflows and a key driver of the market’s gains.

All sectoral indices closed higher, led by Services, which surged 4.85 percent on the back of gains in index heavyweight International Container Terminal Services Inc. (ICT), which jumped 6.41 percent to P830.00. Meanwhile, Century Pacific Food Inc. (CNPF) was the weakest-performing index constituent, declining 4.76 percent to P25.00.

The peso likewise strengthened on Tuesday, closing at P61.675 per US dollar from P61.746 on Monday. The move represented an appreciation of 7.1 centavos, or about 0.11 percent, allowing the currency to recover part of the previous session’s losses.

The peso opened weaker at P61.74 and briefly touched P61.75 before gradually strengthening throughout the session to an intraday high of P61.65. It eventually settled near P61.68, suggesting that while demand for dollars remained elevated, it was offset by stronger peso buying later in the day.

Oil prices also retreated from recent highs, with both Brent crude and West Texas Intermediate holding relatively steady as traders reassessed the likelihood of major supply disruptions stemming from Middle East tensions. The pullback eased fears of a prolonged global energy shock.

US President Donald Trump also signaled that talks with Iran remained ongoing despite earlier reports that Tehran had suspended diplomatic engagement with Washington after the two countries exchanged strikes anew.

The local currency further benefited from the return of foreign buying in Philippine equities. The shift from P1.13 billion in foreign net selling on Monday to P628.73 million in net buying on Tuesday provided additional support for the peso by increasing demand for peso-denominated assets.