THE stock market could see a lift at the start of the week before investors settle down to await the outcome of a US Federal Reserve policy meeting, analysts said.

The Philippine Stock Exchange index (PSEi) rebounded last Friday in a week where trading was suspended for a day by heavy rains and floods, but the 6,726.01 close was still 0.97 percent down week on week.

The benchmark index is still up five percent for the month.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said the week-on-week drop was a healthy correction as US markets had also lost ground following disappointing tech earnings.

News that inflation had eased, which followed a report that US economic growth beat expectations in the second quarter, allowed Wall Street's three main indices to recoup some losses Friday.

China Bank Securities research director Rastine Mercado said that Friday's PCE (personal consumption expenditure) results would likely provide an initial boost this week.

"We then expect the PSEi to trade sideways leading up to the Fed's policy meeting on July 30-31, with subsequent moves contingent on policy pronouncements from the Fed," he added.

The decline in the PCE — the Fed's preferred measure of inflation — boosted expectations that the US central bank could start lowering interest rates in September after pausing for one last time this week.

"The index may continue with its consolidation path over the coming weeks as investors adopt a more cautious stance in light of forthcoming market-moving events and the 2Q24 earnings season through mid-August," Mercado continued.

Among the firms scheduled to brief analysts on second quarter and first half results this week are BDO Unibank Inc., the country's largest bank, and Manila Electric Co.

Philstocks Financial Inc. senior research analyst Japhet Tantiangco also said that investors would be watching out for clues following the July 30-31 meeting.

"If the Fed gives a dovish outlook, this may spur optimism in the local market," he added.

"Investors may also watch out for the upcoming S&P Global Philippines Manufacturing PMI for clues on the local economy," Tantiangco continued.

The measure of manufacturing output slowed in June but remained positive. S&P Global is scheduled to report results for July on August 1.

Some bargain-hunting could occur, Tantiangco said, with the market still undervalued, while an extended rally is a possibility as the 50-day exponential moving average has risen above its 200-day counterpart.

Online brokerage firm 2TradeAsia.com, meanwhile, said the Fed meeting would pull investor focus in the absence of any geopolitical surprises.

"Prices are already baking in a status quo move — but greater weighting will be placed on any supportive comments for a September rate cut," the firm said.

This week's immediate support would be at 6,400-6,650, analysts said, while resistance was seen at 6,700-7,000.