The local stock market opened the new year strong, fueled by expectations of easing inflation, traders said.

The benchmark Philippine Stock Exchange index (PSEi) closed at 6,554.04 yesterday, up by 104 points or 1.61 percent, while the broader All Shares index gained 41.38 points or 1.21 percent to finish at 3,465.97.

Total value turnover reached P3.6 billion. Market breadth was positive, 100 to 77, while 47 issues were unchanged.

Claire Alviar of Philstocks Financial said the positive market sentiment was driven by the expectations Philippine inflation would continue to slow down.

'The possibility that inflation would settle within the two to four percent target of the government in December lifted market sentiment. Investors were also waiting for some economic data set to be released this week, including the S and P Global Philippines Manufacturing PMI, and labor force survey,' she said.

The December inflation number will be released on Jan. 5, Friday.

Elsewhere in Asia, shares started the first trading day of the new year on a steady footing as investors returning after a holiday lull looked ahead to fresh trading catalysts from key economic releases later in the week.

Risk appetite was strong after global shares ended 2023 with their biggest annual rise in four years, driven by the prospect that major central banks globally could begin easing rates this year in a major boost for consumers and businesses shackled by high borrowing costs.

Also in a sign that the risk-on mood seen in December was extending into the new year, the world's largest cryptocurrency bitcoin stormed above $45,000 on Tuesday for the first time since April 2022.

'We could see equity just keep going on its merry ascent and we need to be open-minded to all possibilities,' said Chris Weston, head of research at Pepperstone.

'But with fund manager sentiment the most upbeat since January 2022, cash levels having been reduced and many other signs of broad exuberance, it feels like the distribution for risk is becoming more evenly distributed.'

Market focus now turns to a slew of data due this week which will give further clarity on how much room there is for major central banks globally to ease monetary policy, and how soon those rate cuts could come.

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