FXCM

From consumer staples to energy services and AI chips - this week's FXCM Hot Stocks span KO (Coca-Cola), KGS (Kodiak Gas Services), and NVDA (Nvidia).

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Markets are being tested from several directions at once.

With tensions around Hormuz, shifting inflation expectations and the Q2 earnings season gathering pace, Delta, Johnson & Johnson and Meta are approaching potentially decisive moments.

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Looking ahead to the key market stories this week.

1. Earnings from ASML and TSMC - two crucial checkpoints of the global chip supply chain - are closely monitored for signals around the viability of the AI boom. Both are expected to maintain solid growth momentum as AI demand outpaces supply and hyperscalers keep raising their capex to build the necessary infrastructure. However, the pace could slow amid rising input costs, tech trade restrictions, risks to AI proliferation and macro-geopolitical headwinds.

2. JPM is seen delivering another solid quarter amid rising M&A and IPO activity, driving investment fees higher alongside solid trading performance amid market volatility. However, banks face a complex environment that can weigh on top and bottom lines. Lingering geopolitical tensions, macro uncertainty, ballooning household debt, elevated delinquencies and plateauing net interest income remain key headwinds.

3. CPI update could show cooling price pressures as oil prices have come down from their post-war peak, which could buy the Fed more time. However, renewed hostilities sustain inflationary risks and half of Fed officials expect higher rates this year according to the June dot plot. Against this uncertain backdrop the tight-lipped new Fed Chair testifies to Congress, with markets looking for more insights into his policy intentions.

4. The central bank of South Korea has made a hawkish shift, pointing to monetary tightening ahead, with two dissenters voting in favour of a hike at the last meeting. Inflation is surging, reaching its highest level in over two years in June, with home prices also on the rise. A weak won gives additional reason for rate hikes, as the economy is supported by booming semiconductor exports on the back of the AI buildout. However, officials may want to wait amid elevated uncertainty, uneven growth and declining oil prices.

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