Key takeaways:

• US earnings season will be headlined by Microsoft, Alphabet, and Meta Platforms

• Inflation figures in focus, with the Fed tipped to potentially hike rates one last time

Economic Calendar and News

Federal Reserve officials convene this week for the two-day meeting of the Federal Open Market Committee. At the end of the meeting, the Fed will decide interest rates. 

As it stands, forecasts suggest the world’s most important central bank will lift the federal funds rate by 25 basis points to a range of between 5.25% and 5.5%. If that transpires it would result in the highest rate since 2001, although observers are now predicting this could be the final rate hike in the Federal Reserve’s tightening cycle.

The US economic calendar also features an advance estimate for second-quarter gross domestic product (GDP). The figures are expected to show the US economy grew at a rate of 1.1% during the second quarter of the year, which would exceed initial forecasts of 0.6% growth.

Also coming up later in the week is the Fed’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) Price Index. Based on preliminary estimates, the data for June could show that prices rose by 0.1%, which would be steady with the rate from a month prior. 

However, on an annual basis, the rate of growth could slow markedly from 3.8% to 2.9%, which would offer hope to traders that the Fed may be able to achieve a ‘soft landing’ while getting inflation back to its target of 2%. Core prices are tipped to remain a little more sticky, with the consensus view putting that metric at 4.3% from a year earlier.

Meanwhile, inflation is also in focus in Australia. A Reuters survey of economists has annual inflation for the June quarter coming in at 6.2%, compared with 7% in the March quarter. Similarly, trimmed mean inflation is anticipated to slow from 6.6% to 6%.

Two key areas within the inflation report may be services inflation, which has been trending upwards despite an overall decrease across recent months, and rental costs. With rental vacancies extremely tight across the nation, rental costs probably accelerated in the June quarter and underpinned much of the June result.

The monthly CPI indicator is forecast to ease fractionally from 5.6% to 5.5%.

On Friday we’ll also receive retail trade data from June that could point towards a modest contraction in sales compared with May.

Overseas, the European Central Bank will meet to decide interest rates, and economists believe a quarter-of-a-percent rate hike is on the cards, which would mean a cash rate of 4.25%.

Stocks on watch

While US names are more likely to be making major moves this week, there are still some ASX stocks that could line the headlines over the coming days.

For starters, iron ore giant Fortescue Metals Group (ASX: FMG) will publish its June quarterly production report on Wednesday. The results should include the first production out of the company’s Iron Bridge magnetite mine in the Pilbara, which eventually is expected to contribute to 22 million tonnes production per annum, or around 10% of the miner’s WA output.

It comes just days after Rio Tinto (ASX: RIO) reported its best iron ore exports in five years, albeit with downgrades across other aspects of its business, including alumina and copper. At the same time, commentary about China’s recovery also raised uncertainty, something that FMG shareholders will be scrutinising in the face of slowing growth in the world’s second largest economy.

From other sectors, there are quarterly reports from the likes of Beach Energy (ASX: BPT), South32 (ASX: S32), and Sandfire Resources (ASX: S32). The trio all focus on resources that are tied to the health of the global economy, which means that forward-looking guidance could be given a great deal of attention amid expectations the US is heading for a recession.

The biggest stories this week will come from the US, with earnings season turning into one of the busiest on the calendar. Mega-tech is the drawcard, with Microsoft (NASDAQ: MSFT) and Alphabet (NASDAQ: GOOGL) reporting Tuesday US-time, and then Meta Platforms (NASDAQ: META) publishing its earnings a day later on Wednesday.

Artificial intelligence has been all the rage for the last couple of months, and each of these companies offer direct exposure to this popular theme. In the case of Microsoft and Alphabet, cloud computing growth will also be put under the microscope. Alphabet and Meta will come in for attention surrounding advertising expenditure as the US economy teeters, and the latter will almost certainly provide a more detailed update on the growth of its Twitter rival, Threads.

Among the other high-profile stocks scheduled to report this week are companies such as Visa (NYSE: V), Mastercard (NYSE: MA), The Coca Cola Company (NYSE: KO), McDonald’s (NYSE: MCD), Boeing (NYSE: BA), Verizon (NYSE: VZ), Ford Motor Company (NYSE: F), Exxon (NYSE: XOM), and Chevron (NYSE: CVX).

Across the board, each of these companies are expected to shed light on the state of the American economy. From payment operators Visa and Mastercard, which will detail consumer spending, to McDonald’s, where observers will gain insights on how consumer preferences are changing, to Exxon and Chevron where energy demand will be in focus, the results will be considered bellwether indicators for the coming months.

See which companies to look out for this earnings season, including the key points to watch.