US sharemarkets soared by 4.26 per cent last week, capping off a 9.26 per cent gain in July, the best month since November 2020.

The rally accelerated after last week’s FOMC meeting was less hawkish than expected.

The ASX200 closed 2.26 per cent higher for the week, locking in a 5.74 per cent gain for July, supported by the rebound on Wall Street and as last week’s Australian inflation data was not as high as feared.

Here are the top five things to watch in markets this week.

1. RBA set to deliver third consecutive 50 basis point interest rate hike

On Tuesday, the RBA is widely expected the lift the cash rate by 50 basis points to 1.85 per cent as part of its commitment to slow inflation.

2. US Q2 earnings season rolls on

US Q2 earnings season rolls on this week with reports from PayPal, Airbnb, Uber and Starbucks.

The number of bookings on Airbnb is expected to increase in Q2.

Revenue is expected to climb 56 per cent from last year to $2.1 billion, and adjusted EBITDA is expected to double to $592.1 million.

3. Bank of England to lift rates

The Bank of England is expected to deliver a 50 basis point rate hike when it meets on Thursday to bring rates to 1.75 per cent.

Given rising concerns over a recession, there is some chance of a dovish surprise by watering down its commitment to act “forcefully”.

4. US jobs data

Labour market data will be in focus as the Fed said last week that the pace of future rate hikes is data-dependent.

The market is looking for payroll growth of +250,000 and for the unemployment rate to remain flat at 3.6 per cent.

A weaker number would increase the chances the Fed might slow the pace of rate hikes into year’s end.

5. Australian earnings

The June-half-earnings reporting season kicked off last week, and earnings reports will continue over the next month.

As always, the focus will be on quantity and quality of earnings and forward guidance as investors seek to learn which companies can pass on the effect of higher material and labour costs and which companies will be forced to wear them.

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