Investors face another busy week as major technology companies prepare to report earnings, central banks weigh inflation risks and geopolitical tensions continue to influence global markets. Developments surrounding artificial intelligence, the conflict in the Middle East and key economic data releases are all expected to shape investor sentiment in the days ahead.
1. Technology earnings take centre stage
The latest round of earnings from major U.S. technology companies will dominate market attention, with investors looking for fresh signals about the strength of artificial intelligence spending.
Alphabet (NASDAQ:GOOG) is scheduled to report quarterly results after U.S. markets close on Wednesday. As one of the largest technology companies investing heavily in AI infrastructure, its outlook for capital spending will be closely watched for signs that the industry’s investment cycle remains intact.
Chipmakers Intel (NASDAQ:INTC) and Texas Instruments (NASDAQ:TXN) will also release earnings, offering further insight into demand across the semiconductor sector. While AI-related shares have been among this year’s strongest performers, recent concerns over the sustainability of massive infrastructure spending have weighed on the sector.
Tesla (NASDAQ:TSLA), American Express and defence group RTX are also among the notable companies reporting during the week.
2. Middle East conflict remains a major market risk
Geopolitical tensions continue to influence financial markets as renewed military action between the United States and Iran raises concerns over energy supplies.
Although recent corporate earnings from major Wall Street banks highlighted resilient dealmaking and trading activity, investors remain focused on whether higher oil prices will fuel another wave of inflation.
The fragile ceasefire between the United States and Iran has deteriorated, leaving uncertainty around shipping through the Strait of Hormuz, one of the world’s most strategically important oil transport routes.
Brent crude has once again climbed above $90 a barrel after experiencing significant volatility throughout the conflict. Prices previously surged above $110 before retreating following June’s ceasefire agreement, only to rebound as hostilities resumed.
3. U.S. PMI data to provide economic update
Friday’s release of S&P Global’s preliminary manufacturing and services purchasing managers’ indices for July will provide investors with another snapshot of the U.S. economy.
The composite PMI stood at 52.2 in June, supported by stronger activity in the services sector during the FIFA World Cup jointly hosted by the United States, Canada and Mexico. Any reading above 50 indicates economic expansion.
Manufacturing activity also continued to expand for a fourth consecutive month as companies increased inventories to guard against supply disruptions and rising costs linked to the conflict in the Middle East.
4. SpaceX prepares another Starship launch
SpaceX (NASDAQ:SPCX) is aiming to carry out the 13th Starship test flight as early as Thursday after last week’s launch attempt was halted shortly before liftoff.
According to the company, the mission will focus on completing a successful launch sequence, ascent, stage separation, boostback burn and landing burn. Starship will also carry Starlink V3 satellites during the test.
The previous launch was cancelled after several engines failed to ignite. Starship’s 12th test flight also encountered engine-related issues, prompting an investigation by the Federal Aviation Administration.
Shares of SpaceX recovered modestly in extended trading after declining below their initial public offering price last week.
5. ECB interest rate decision in focus
Attention will also turn to the European Central Bank, where policymakers are widely expected to leave interest rates unchanged at this week’s meeting.
However, investors will be looking for guidance on how officials intend to respond to persistent inflation pressures in the coming months.
The ECB increased interest rates by 25 basis points in June, citing inflation risks linked to higher energy prices following the conflict involving Iran.
Inflation across the euro area remains close to 3%, above the central bank’s 2% target, increasing concerns that stronger wage demands could prolong price pressures.
Analysts at ING believe policymakers could still opt for another surprise increase this week.
“[T]he ECB might take the opportunity of higher energy prices to get a second hike in earlier than September,” the analysts said.