RBA Rate Decision, Big Tech Earnings, and Fed Meeting to Dominate Markets

The upcoming week in Australian finance will be pivotal for several reasons. Firstly, key economic indicators such as Q2 inflation and producer prices will be released on Wednesday, which could influence the Reserve Bank of Australia's decision to raise interest rates again.

According to Josh Gilbert, lead Analyst for APAC at eToro Group Ltd, 'markets are pricing around a 35% chance of a 25 basis point increase next month' but this number could shift if the inflation report delivers another upside surprise. The consensus expects annual headline inflation to accelerate to 4.4%, well above the RBA's target band.

The RBA Governor Michele Bullock will speak on Tuesday, providing insight into how the board is leaning ahead of their August meeting. This week's shock jobs report has already lifted rate hike expectations, and with households feeling the squeeze from three hikes this year, a fourth one could put investors on edge.

Meanwhile, four of the Magnificent Seven tech giants will release their earnings reports this week, including Microsoft, Meta, Apple, and Amazon. These companies carry a significant chunk of the S&P 500, and investors are eager to see if their massive AI spending is translating into revenue growth and meaningful returns.

The Federal Reserve meeting on Tuesday and Wednesday will also be closely watched as markets await its latest rate decision. Despite recent easing in inflation, the Fed's preferred PCE measure remains elevated at 4.1%, double its target, and Chair Kevin Warsh has stated that the committee has no tolerance for persistently high inflation.