The composite index closed 71 points higher as the market bottomed out ahead of the 2,200-point support, says BPI Securities.

Several gainers were Bank of Phil Island, Ayala Land, Equitable PCI Bank, Globe Telecom, PLDT and SM Investments.

BPI Securities noted that favorable share prices and positive short-term technical position may have tipped the scale in favor of position takers. The market’s gains had taken the index right at resistance of 2,300 points.

"Market momentum may push the index past this resistance level but sustainability of gains remain questionable given the market’s recent volatility. Demand remains evident, however, recent volatility may induce greater caution," says BPI.

AB Capital says investors remain concerned on what the Bangko Sentral officials will be doing in its next policy meeting given the past week’s adverse local developments.

"The peso has weakened near the P53: $ 1.00 level and threats of inflation further creeping up arose as crude oil rose continued to rise above $ 71 per barrel."

BSP officials’ earlier comments, that interest rates now are "too low," did not help the situation.

"These factors have strengthened fears that given all these pressures, BSP may raise local rates in their next meeting next month.

Overnight borrowing and lending rates have been unchanged at 7.5 percent and 9.75 percent since the third quarter of last year, while T-bill rates slightly moved up to 5 percent in the last auction."

"While inflation figures have remained within their expectations in the first five months, full impact from the 12 percent last February and rising oil prices, will continue to fan a rate hike option," says AB Capital.

The US economy which consumes 25 percent of world oil showed better than expected strength, growing 5.3 percent in the first quarter, its fastest expansion rate in 2.5 years.

Last week, the price of crude dropped by 4.9 percent on fears that higher raw material prices would raise global inflation.

Commodity demand has surged year to date because of economic growth in China and India as well. Supply risks from the geopolitical situation in Iran continued to support crude prices.

AB Capital noted that the global markets continued to roll from the interest rate punch in the US, knocking down the PSEi back towards the 2,240 level within the week before recovering on Friday near the 2,300 mark.

"This is the third straight week that the local market has been down, bringing it to oversold territory on a technical perspective."

Reports of massive redemptions from the instantly famous Unit Investment Trust Funds (UITFs) also accelerated the local market’s drop, fuelling a selling spree in local equities. Week-on- week, the local market lost 2.5 percent in value as it closed at the 2,300 level.