THE peso's performance and inflation data due Wednesday will likely drive the stock market's performance this week, analysts said, with investors also looking to bargain-hunt following recent volatility.

The benchmark Philippine Stock Exchange index (PSEi), which hit an over five-month low last week, recovered some ground on Friday but still ended down 2.82 percent week-on-week at 6,433.10.

Luis Limlingan, managing director at Regina Capital Development Corp., said the market might initially track Wall Street's rise on Friday following favorable news on US inflation.

Further price action will be influenced by the release of Philippine inflation data for May this Wednesday, he added.

Japhet Tantiangco, senior research analyst at PhilStocks Financial Inc., expects some bargain hunting to occur following last week's plunge, but cautioned that the market's direction would be influenced by the May inflation report and April unemployment figures out on Thursday.

Today's release of S&P Global's Philippines Manufacturing PMI, meanwhile, could also factor into investor decisions.

"An inflation print faster than the preceding month's 3.8 percent, especially one that breaches the upper end of the government's 2.0-4.0 percent target, may also weigh on market sentiment," Tantiangco said.

The Bangko Sentral ng Pilipinas (BSP) on Friday said that inflation could have hit as high as 4.5 percent last month due to power rate hikes, costlier vegetables and a weaker peso.

The 3.7- to 4.5-percent estimate released by the central bank still includes the possibility of an easing from April's 3.8 percent, but is skewed toward a breach of the BSP's 2.0- to 4.0-percent target.

A result higher than 4.0 percent will end a five-month run of within-target inflation and, given the peso's decline, could raise the likelihood of the BSP keeping key interest rates higher for longer.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., noted that the latest US economic data could justify potential rate cuts by the Federal Reserve and the BSP.

"US Treasury and other global bond yields corrected lower, and global crude oil prices declined, which could help ease inflationary pressures," he added.

Both the Dow Jones Industrial Average and the broad-based S&P 500 rose on Friday after April data for the Fed's favored inflation measure broadly matched expectations and fanned hopes of rate cuts.

The tech-heavy Nasdaq Composite Index, meanwhile, closed almost unchanged.