Key takeaways:

• Earnings this week include Webjet, Fisher & Paykel Healthcare, Technology One, Nvidia, and Costco

The US is likely to remain the key driver for market activity on home soil this week, with fresh inflation data and debt ceiling negotiations on watch.

Economic Calendar and News

A breakdown in negotiations over the US debt ceiling is the main talking point entering the new week. Democrats and Republicans hit a wall as the two parties dig their feet in and hold firm in their demands, just as the US lurches closer towards a potential first-ever default.On Wednesday, the Federal Reserve will release the minutes from its recent FOMC meeting, where policymakers raised the Federal Funds Rate by 25 basis points. On Friday, the Bureau of Economic Analysis (BEA) will publish the Personal Consumption Expenditures (PCE) Price Index for April. 

As the Federal Reserve preferred gauge for inflation, the index likely rose 0.2% last month, which would signal an acceleration compared with the 0.1% reading the month prior. Nonetheless, on an annual basis, consensus readings suggest prices gained 4.1% over the last 12 months, which would be the slowest growth in two years.

Elsewhere, fresh data will shed light on consumer sentiment, as well as new and pending home sales for April.Locally, keep an eye out for manufacturing and services activity, as well as preliminary retail sales figures, which are tipped to show a contraction of about 0.2% month-over-month. Rounding things out, the Reserve Bank of New Zealand is tipped to lift interest rates by 25 basis points to 5.5% on Wednesday, while UK inflation is forecast to come in at 8% versus 10.1% in January.

Stocks on watch

In a major move for the industry, buy-now pay-later companies will be regulated under credit laws and subject to a modified version of responsible lending obligations. That means payments operators from the BNPL segment will be required to hold an Australian credit licence and assess the suitability of their products for users. As it stands, responsible lending obligations were applicable to all credit providers except BNPL firms. Proposed legislation surrounding the changes seeks to improve disclosure requirements and cap fees on missed payments. The changes are expected to have differing levels of impact for companies like Afterpay-owner Block (ASX: SQ2), Zip (ASX: ZIP), Humm (ASX: HUM), and Latitude Group (ASX: LFS), among others.

While iron ore prices headed to a weekly gain last week on the prospect of further stimulus for the world second largest economy, Dalian iron ore futures slid almost 2% on Friday. Ongoing concerns about the demand outlook of key Chinese steel producers are weighing on the sector. 

According to ANZ, China property indicators have yet to show signs of a sustainable recovery, with new starts contracting and price growth moderating. Investors will be keeping a close eye on inventory levels at Chinese steel mills, a barometer of sorts for iron ore stocks like Fortescue Metals (ASX: FMG), Rio Tinto (ASX: RIO), BHP (ASX: BHP), and Mineral Resources (ASX: MIN).On Wednesday investors will be treated to a closer look under the hood at Webjet (ASX: WEB). Australia and New Zealand largest online travel agency will unveil FY23 results and hold an investor briefing, with the company expected to show strong performance amid roaring demand for travel.

Webjet previously forecast that profitability within its WebBeds division would exceed pre-pandemic levels, while its online travel agency division was forecast to match first-half performance. Some observers believe surging revenue could see the company be in the black for the first time in four years, albeit analysts have dialled back expectations for a dividend.

Back in January, Fisher & Paykel Healthcare (ASX: FPH) surprised the market by announcing it expects a revenue upgrade for the year ending March 31. The company guided for operating revenue to be within the range of approximately NZ$1.55 billion to NZ$1.60 billion, which although down versus FY22, was ahead of market expectations.

Those figures will be put to the test this week when FPH reports on Friday. China COVID outbreak was a tailwind earlier in the half, and with that now well and truly in the rear-view mirror, investors will be looking for greater certainty on Fisher & Paykel post-COVID growth outlook.

Shares in Technology One (ASX: TNE) have largely defied the tech slump across the last 15 months, but that will all be put under the microscope on Tuesday when the business hands down its half-year results. Australia largest enterprise resource planning (ERP) software-as-a-service (SaaS) provider, the company revenue has been propped up by reliable contributions from education, government, and health care clients.

Shareholders will focus closely on the company churn rate, which was less than 1% at the time of the last report. However, the growth of its recently-acquired education software firm will indicate whether recurring revenue in the UK is on the up, one of the factors that investors would likely expect given the company lofty valuation on a price-to-earnings basis.

In the US, earnings from Nvidia (NASDAQ: NVDA) and Costco (NASDAQ: COST) are the week focal point for corporate activity.

Chip maker Nvidia first-quarter earnings will be released after the closing bell on Wednesday, US-time. With AI a topical theme in 2023 thus far, NVDA shares have rallied more than 118% since the start of the year. Investors will be looking for clues that suggest the demand outlook for its semiconductors is improving, especially its new low-priced GPUs.

Costco third-quarter earnings will follow a day later. The supermarket giant sales advanced by 3%  in April to US$17.9 billion, with comparable sales up 1.4%. International markets were cited as one of the key drivers for growth, although the role of Costco private label brand and active membership base were also viewed favourably by analysts.