Key takeaways:

• Tomorrow RBA monetary policy decision is expected to drive action for the ASX this week, with the US market closed for trading on Tuesday due to Independence Day

Investors will look to tech giants Apple and Tesla to pace the market, while interest rates loom as a pivotal moment for local shares.

Economic Calendar and News

With the Reserve Bank of Australia meeting this week, expect all the local financial markets chatter to revolve around tomorrow monetary policy decision. 

A majority of experts are leaning towards a pause following last week lower-than-expected headline inflation data, however, the decision has been described as lineball' by many observers. 

Headline inflation slowed to 5.6% for May versus 6.8% the month prior, with accommodation and fuel expenses dropping sharply. By way of comparison, the market anticipated a reading of 6.1%.

However, while much of the media opted to focus on headline inflation, core inflation, which removes the more volatile price components, actually accelerated to 0.5% in May, as opposed to 0.2% in April.

There were also some concerns in last week retail figures, where sales grew 0.7% for the month, far outpacing the 0.1% growth expected by economists. 

Futures markets suggest a 40% chance of a hike to 4.35%, but even if there is no hike in July, the reprieve is expected to be short lived, with a move expected by August. NAB, Westpac, and ANZ are among those predicting a rate hike tomorrow and a terminal rate level of 4.6%

Australia monetary policy path has been far more gradual than many of its peers, such that there is a large discrepancy between interest rates here and abroad.

The jobs market remains incredibly tight, with unemployment recently decreasing back towards multi-decade lows, coming in at 3.6%.

A pause would allow the central bank to review the next quarterly plot for inflation, however, the upcoming monthly indicator for July could throw a spanner in the works as the figure is likely to be subject to volatile movements as electricity prices skyrocket across the country.

Other data on the cards this week includes CoreLogic dwelling prices, with national housing values likely to have risen yet again, building approvals, and the trade balance for May.In the US, amid a holiday-shortened week, investors will digest fresh data that underpins the state of the world largest economy. This includes the job openings and labor turnover survey, manufacturing activity, minutes from the most recent Federal Open Market Committee meeting, and non-farm payrolls for June.

Based on consensus figures, the market is looking for job openings to have fallen to 9.9 million last month, as opposed to 10.1 million in April. Private sector payrolls are projected to have risen by 180,000, while the US economy probably added 200,000 jobs in June, down from 339,000 in May. That could give rise to an unchanged unemployment rate of 3.7%.

The Federal Reserve minutes will detail further insights on the US central bank first rate pause' following 10 consecutive hikes since March of last year. Nonetheless, the bank figureheads made it clear that further rate hikes are expected, with the market tipping a 90% chance of an increase to the federal funds rate at its next meeting later in July.

Stocks on watch

With the RBA in focus this week, many of the stocks on watch over the coming days are rate-sensitive names that are leveraged to monetary policy.

Starting with the banks, including the Big Four' in Commonwealth Bank (ASX: CBA), NAB (ASX: NAB), Westpac (ASX: WBC), and ANZ (ASX: ANZ), another rate hike could be detrimental to their loan books. 

A significant number of mortgage holders are set to roll over from fixed rate loans that were locked in at pandemic-era lows, to variable rate loans that are now markedly higher. Each rate hike would appear to be increasing the risk that the banks record a jump in arrears. 

Meanwhile, with net interest margins seemingly peaking late last year, the tailwind normally provided by a steady increase in interest rates is playing second fiddle to concerns about competition, wholesale funding costs, and bad debts.

Elsewhere, consumer stocks may attract focus for the same reason. The sector has already been sporting attention over recent weeks as investors gauge the impact of an expected slowdown in consumer spending. 

However, with last week retail sales data coming in much stronger than expected, mixed signs have emerged. Regardless, tomorrow rate decision could have an influence on names like Harvey Norman (ASX: HVN), JB Hi-Fi (ASX: JBH), Premier Investments (ASX: PMV), Super Retail Group (ASX: SUL), and others. Generally speaking, rising interest rates are thought to take away from borrowers' purchasing power as it would leave them with less disposable income, but some names like luxury retailer Cettire (ASX: CTT) have bucked this trend in recent times and reported strong sales growth.

The other segment of the market influenced by monetary policy is the real estate sector. A number of real estate trusts have been sold down since the RBA commenced its rate hike campaign over a year ago. 

Many of these names boast high debt levels, referred to as gearing, but the issue for investors is expectations that valuations will be slashed once property values are reassessed as part of asset reviews. This includes retail REITs like Scentre Group (ASX: SCG) and Vicinity Centres (ASX: VCX), office REITs such as Cromwell Property (ASX: CMW) and Centuria Office (ASX: COF), as well as integrated asset managers like Dexus (ASX: DXS) and Charter Hall (ASX: CHC).In corporate news, United Malt Group (ASX: UMG) is reportedly in line for a binding takeover bid from Malteries Soufflet. The French suitor had been conducting due diligence on a potential takeover for some time. 

It is understood that process has given the business all the conviction it needs to offer UMG shareholders $5 per share to acquire all securities in the ASX-listed commercial malster. United Malt Board is recommending the transaction, with a vote to follow in the coming weeks. The bid values the company at nearly $2 billion.

Overseas, Apple (NASDAQ: AAPL) touched yet another fresh all-time high, and charged past a US$3 trillion market cap. It is the first time that any US-listed company has reached that valuation, with the tech giant also at the forefront of this year enormous Nasdaq rally.The US auto sector will be in the spotlight as a number of companies hand down delivery reports and sales updates. Some of the stocks to watch include Tesla (NASDAQ: TSLA), Nio (NYSE: NIO), Li Auto (NASDAQ: LI), Xpeng (NYSE: XPEV), Ford (NYSE: F), General Motors (NYSE: GM), and Rivian (NASDAQ: RIVN). 

Li Auto, XPeng, and Nio delivered a combined 51,902 vehicles last month, up from 41,280 a year earlier, and a record for any month. On the other hand, Tesla reported a record 466,140 deliveries for the second quarter, and production of 479,700 vehicles. It was the fifth consecutive period where Tesla production activity has outstripped deliveries.