PERSISTENT macroeconomic headwinds, including rising inflation that has dampened the outlook on interest rate cuts this year, are expected to keep weighing on the stock market this week.

The bellwether Philippine Stock Exchange index (PSEi) extended a losing streak to seven days last Friday and also closed 1.28 percent lower week on week at 6,659.39.

Japhet Tantiangco, senior research analyst at Philstocks Financial Inc., said the bourse "turned more bearish" after it dropped below the 6,700 level last week and trimmed its year-to-date gains to 3.25 percent.

"[W]orries over the Philippines' inflation and interest outlook are expected to persist, which, in turn, may continue to weigh on the market," he added.

Growing inflationary risks — the rate rose to 3.7 percent last month and is expected to top the 2.0- to 4.0-percent target in the second quarter — have raised the likelihood that expected policy easing this year will be delayed.

"Concerns over the possibility of a delayed rate cut by the Federal Reserve (Fed) amid the US inflation picture may also dampen sentiment," Tantiangco continued.

Although bargain-hunting opportunities are expected to present themselves and provide a lift, he said the PSEi would overall likely see a "sideways movement."

For online brokerage 2TradeAsia.com, a September 2024 cut by the Fed is "more probable" compared to that of June, as high inflation has renewed pressure on the US central bank to keep rates higher for longer.

"This aligns with our view... that [lower] rates may come later than originally communicated, and rates are not coming down until high inflation relaxes into the 2 percent range," it added.

A continued upward trend in domestic inflation, meanwhile, could lead to the Bangko Sentral ng Pilipinas mirroring a potential third-quarter policy easing "in time with what is implied by [the] US Fed."

Investors should also exercise extra caution this week as the PSEi could fall below the 6,500 level, 2TradeAsia.com advised.

"On the front, any stabilization above 6,600 could open windows for short-term range trading, at least while the broader market rationalizes the capital cost outlook for the remainder of 2024."

Philippine economic releases that could influence the market this week include overseas Filipino remittance data for February, due today, and balance of payments and gross international reserves figures to be released on Friday.

Chart-wise, analysts said the market's support was now expected to be between 6,500 and 6,600, while its resistance was seen at 6,700 to 6,800.