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(Sharecast News) - US earnings season will kick off in earnest on Tuesday, with quarterly results due from banking giants JPMorgan, Bank of America, Goldman Sachs, Citigroup and Wells Fargo.
Commenting on the upcoming bank earnings, Susannah Streeter, chief investment strategist at Wealth Club, said investors will be looking for reassurance that trading activity has remained buoyant during another volatile quarter, while keeping a close eye on loan quality, net interest income and the outlook for consumer and business borrowing.
"There is also likely to be plenty of focus on investment banking divisions," she said. "After a lull, activity appears to have revved up, with IPOs, secondary share sales and mergers and acquisitions gathering momentum. The huge wave of investment pouring into artificial intelligence is likely to have created fresh financing opportunities. Banks are increasingly well placed to benefit from the next phase of the AI boom - not simply by financing technology companies, but by funding the vast data centres, power infrastructure and corporate acquisitions needed to support the AI revolution."
Also across the pond, new Federal Reserve chair Kevin Warsh will provide testimony to Congress on Tuesday, while the US consumer price index for June will be released.
Kathleen Brooks, research director at XTB, said: "Analysts expect a 0.1% decline in the headline CPI rate for June, which should cause the annual rate to moderate from 4.2%. The core rate is expected to remain steady at 2.9%. Overall, the decline in headline CPI is likely to be driven by falling gas prices. However, the recent increase in hostilities between the US and Iran may cause investors to look through any weakness in the CPI report, and it may not disrupt the upward bias for the dollar."
Brooks said Warsh's testament is also worth watching. "In recent weeks, Warsh has said that the Fed remains laser focused on the 2% inflation target, and that inflation expectations are abating," she noted. "What side will he fall on this week, and how will the recent spike in the energy price impact his thoughts as we lead up to the next FOMC meeting at the end of the month?
"If Warsh maintains a moderately 'hawkish' stance then this could further disrupt the stock market rally in the short to medium term. It is hard to know how the market will react to Warsh's comments and this week's CPI report, since Warsh does not provide forward guidance, and the June CPI report feels like old news due to the recent increase in the oil price. The bigger picture for investors is that monetary policy risks are rising as the US stock market rally continues to grind higher."
Investors will also eye Chinese trade figures for June.
In the UK, full-year results from Watches of Switzerland and trading updates from emerging markets investment manager Ashmore, recruiter Robert Walters and Transact owner IntegraFin will be in focus.