THE stock market could climb further this week as investors digest positive cues from both the US Federal Reserve (Fed) and the Bangko Sentral ng Pilipinas (BSP) regarding interest rate cuts.

The benchmark Philippine Stock Exchange index, which closed at 6,648.23 points last Friday, climbed 2.39 percent week-on-week as it tracked record gains on Wall Street following lower-than-expected US inflation and testimony by Fed Chairman Jerome Powell that the US central bank would not wait for inflation to return to target before cutting rates.

Philstocks Financial Inc. senior research analyst Japhet Tantiangco said the bourse was able to get past its 200-day exponential moving average and added that the rally provided opportunities for short-term profit taking.

"[A]t its current level, the local market is still deemed attractive. Hence we also see bargain-hunting possibilities, especially for long-term investors next week," he added.

An upward bias will be driven by expectations of an easing by the BSP next month, Tantiangco continued, as central bank Governor Eli Remolona Jr. has continued to insist that local monetary authorities would not wait for the Fed to cut.

"Adding to this is the improvements in the peso's position against the US dollar. If it continues, then it is also expected to help the local bourse," he said.

Online brokerage firm 2TradeAsia.com said that markets were pricing in 90-100 percent likelihood for a September Fed rate cut.

"Fed Chair [Jerome Powell]'s comments that inflation need not hit the 2 percent interest rate cuts likewise boosted optimism, pushing yields to expect at least two interest cuts for 2024, starting in September," the firm said.

"With the Fed's tune much more upbeat than Q2 (the second quarter), a local rate cut from the BSP is looking more visible after comments from officials that there is more scope for an ahead-from-the-Fed rate cut."

China Bank Securities research director Rastine Mercadoc, meanwhile, said a "continuation rally remains in play for the coming week, but selling pressure [is] seen to pick up at 6,700 level."

"Given improving interest in the local market, we could see a continuation rally ... with the 6,700-6,750 level as [the] next major resistance. We then subsequently expect wider profit-taking to occur, with the index consolidating and prices possibly pulling back to the 6,550-6,580 level."

Analysts said that investors would also be watching out for May overseas Filipino worker remittances figures due today and June balance of payments data set to be released on Friday.