Data from the US will provide further insight into the future course of interest rates. Meanwhile, major earnings will put this year's surge in tech stocks to the test.

Data from the US

Analysts have been trying to forecast whether the Fed will continue to raise interest rates to combat inflation following a widely anticipated 25 basis point increase at its May policy meeting. Many anticipate the central bank to drop rates later this year in order to relieve the economy's hold on increasing borrowing costs.

The first-quarter GDP data, as well as the Fed's preferred gauge of inflation, the core PCE price index and the employment cost index, both of which are expected out on Friday, will be eagerly followed.

GDP figures are likely to show steady growth, with consumer spending upholding stability. The headline PCE price index is likely to dip, but the core reading is predicted to stay high. The employment cost index is also likely to rise, indicating that inflation remains stubborn.

Consumer confidence, durable goods orders, pending and new home sales, jobless claims, inflation forecasts, and regional industrial activity are also on the economic agenda.

Major earnings

Earnings reports from a few of the most notable companies in technology are expected out this week, in what will be a significant test for markets, with investors looking to see if the tech sector's high gains this year are warranted.

3 of the 4 largest firms in the United States by market capitalisation - Microsoft, Google parent Alphabet, and Amazon - are set to reveal earnings, with Microsoft and Alphabet reporting on Tuesday and Amazon reporting on Thursday. On Wednesday, Facebook parent Meta is caught in between.

European earnings

UBS, Deutsche Bank, Santander, and Barclays are among the major European banks set to report profits within the next week.

The numbers follow a rocky first quarter for banks, which saw the failure of two regional bankers in the United States last month, as well as the spectacular collapse of Credit Suisse and its quickly orchestrated purchase by competitor UBS.

At one point, the event reduced the worth of Europe's banks by about $180 billion. The industry has already rebounded, but it is still worth $70 billion less than it was before the implosion of Silicon Valley in early March.

Eurozone GDP

The Eurozone will announce preliminary figures on first-quarter GDP on Friday, while the region's main countries, Germany, France, and Spain, will issue April inflation reports on the same day.

Latest economic reports show that, amid tighter monetary policy, inflation remains persistent throughout the EU.

The solid growth of the Eurozone's major services sector may ensure that wage pressures stay high, impeding the European Central Bank's efforts to reduce inflation to its 2% objective.

The ECB is anticipated to raise interest rates for the eighth time in a row at its forthcoming May meeting, with most experts predicting a 25-basis-point increase, while a greater increase is not ruled out.

(investing.com, reuters.com)