The Fed decision will be in the main spotlight this week. And more companies are set to report earnings that will provide more insight to investors.

Federal Reserve Interest Rate Decision

The Federal Reserve is anticipated to hike interest rates by a further 25 basis points on Wednesday, despite ongoing inflation and rising worries about the economy's prospects.

It would be the tenth consecutive rate hike, raising the average rate to between 5% and 5.25%, its highest level since 2007. Even though price pressures are easing, inflation remains well above the Fed's annual target of 2%.

Members of the Federal Reserve and investors continue to disagree on the future path of interest rates, with the central bank awaiting rates to remain near current levels through 2023 and markets banking on rate reduction by the end of the year.

More Earnings

Apple, the most valuable corporation in the world by market capitalisation, is scheduled to announce earnings on Thursday, with analysts expecting revenue for its fiscal second quarter to fall to $93 billion and profits per share to come in at $1.43.

The Apple report is an indicator of worldwide consumer demand, and its outcomes are likely to have an impact across markets given its relevance to multiple industries.

In all, earnings for the first quarter were higher than expected. According to Refinitiv, with little over half of the S&P 500 having reported, profits are on track to fall 1.9% year on year in the first quarter. This is a lower drop than the 5.1% dip predicted at the beginning of April.

Ford, Starbucks, Advanced Micro Devices, and Kraft Heinz are among the other well-known corporations due to report earnings in the next week.

ECB Interest Rates

The ECB is expected to raise interest rates again on Thursday, with both a 25-basis-point and a 50-basis-point increase on the cards. The figures on Eurozone inflation and bank lending due out on Tuesday will provide more indication.

Consumer price inflation numbers for April are expected to reveal that underlying price pressures - running around 5% - remain unacceptably high. This would bolster the case for a higher rate rise.

However, if bank lending data suggests that credit conditions have tightened significantly, the case for a smaller rate hike would be strengthened.

US Jobs Report

On Friday, the United States will issue its April employment report, which is likely to reveal that the economy gained 180,000 jobs. While this is still a good number, it would be the third consecutive month of slowing job growth.

The unemployment rate is predicted to rise to 3.6%, but average hourly wages will stay stable.

Data released last week revealed that first-quarter GDP slowed faster than predicted, so the employment data will be extensively scrutinised for clues about how well labour market demand is holding up.

(investing.com, reuters.com)