RISKS of Iranian retaliation following reported attacks by Israel last Friday could further subdue sentiment and drag the stock market lower, analysts said.

The 30-company Philippine Stock Exchange index (PSEi) has now fallen for three straight weeks, having ended 3.25 percent lower week-on-week at 6,443 last Friday.

Episodes of bargain-hunting could occur, Philstocks Financial Inc. senior research analyst Japhet Tantiangco said, as the PSEi is "now at even more attractive levels."

"However, a strong and sustainable rebound may not be seen yet amid prevailing worries," he added.

Investors are expected to watch out for Iran's course of action, Tantiangco continued, stressing that retaliation may "send the market lower."

"Inflation concerns are also expected to weigh on the market amid inflationary risks at play, including rising oil prices, tight energy supply, El Niño's impact on our agricultural production, and a weakening peso," he said.

The currency hit a new 17-month low last Friday as it extended its losing streak to seven days, closing at P57.65 against the dollar.

Given these persistent headwinds, traders will be looking for strong catalysts that could spur optimism and revive sentiment.

Rizal Commercial Banking Corp. chief economist Michael Ricafort noted that the budget balance would be released on Wednesday and did not rule out a possible upward correction for the PSEi.

In the US, growth data and trade deficits are set to be released on Thursday, while the personal consumption expenditure price index is due on Friday.

Ricafort said the bourse could also take a "wait-and-see stance" depending on the outcome of macroeconomic and geopolitical events.

Online brokerage 2TradeAsia.com, for its part, said income reports for the first quarter of 2024 "may be a potential source of excitement, at least on the corporate and sector level."

"The PSEi is now just a touch below where it was at its year-end 2023 close. Expect a shift from growth and deployment to capital preservation while risks abound," it added.

"Consequently, passive income [and] bargain hunting is likely to outperform in the near term, at least while growth stories are being re-cooked amid new variables for [the second half of 2024]."

Chart-wise, analysts said the stock market's support remained at 6,400 while resistance would be between 6,550 and 6,700.