Josh Gilbert, Market Analyst at eToro, shares his three things to watch in Australia in the coming days.
AU inflation Q1 (Wednesday)
This Wednesday’s inflation reading is crucial for May’s upcoming rate decision. Recent inflation data has continued to show prices easing, with February’s data weaker than expected. If this week's quarterly inflation data continues to match the easing we’ve seen from the monthly figures, then a rate cut in May looks very likely, with markets seeing a 100% chance of a 25bps cut.
President Trump’s tariff chaos has actually helped provide conditions that strengthen the argument for further cuts, but it’s a double-edged sword, given the IMF estimate that the impact of said tariffs could slow the Aussie economy to the tune of AU$13bn over this year. By the time the RBA meets in May, the potential fallout from tariffs will be more apparent, the election will have concluded, and they will have a better picture of inflation following this week's data.
So is relief likely? Yes, but we are also not necessarily insulated from the potential impact of a US recession, which, while still unlikely, is a perpetual risk as Trump’s tariffs continue to throw markets into unpredictable cycles.
AU retail sales (Friday)
February’s figures, released in April, revealed that retail sales growth was still trailing behind forecasts. There is optimism that Australians may loosen their wallets once we see further easing on interest rates but recent tariff drama has sent consumer confidence lower. Additionally, some Australian companies are having to suspend or terminate their US trade, meaning that across apparel and lifestyle goods, we may see an increase in mid-year sales that draw Aussies back to local storefronts, but March data is unlikely to prove that trend to be in swing just yet.
In fact, according to ASIC, Retail insolvencies have risen by 19.65% in the nine months leading up to April, with a 36.2% increase in companies entering external administration over that same period. We are seeing an increase in Australian brands entering receivership, as well as international franchises pulling out of the region altogether. There is certainly an end in sight for retailers holding tight, but it may take another rate cut or two before we know where the bottom is.
Microsoft, Meta, Amazon, Apple earnings
Once again, that dreaded word - tariffs - will cast a long shadow over this week’s earnings. While Apple’s Tim Cook seems to have successfully brokered some relief from the tariff squeeze for the software and hardware giant, Apple’s exposure to Asia alongside already weak sales in China may make for some disappointment.
That probably won’t dissuade retail investors, though, who still see the Magnificent Seven as relatively safe stocks despite a broader tech pullback, thanks to AI aspirations still driving high levels of innovation and investment. All four earnings calls will likely be dominated by these AI investment outlooks, with all the tech majors vying to be the ‘go-to’ for individuals and enterprises when it comes to AI.
Apple is the third most popular stock held by Australian retail investors on the eToro platform, followed by Amazon in fourth place and Microsoft in fifth place, while Meta, in seventh place, experienced a 5% QoQ increase in local holders in Q1 2025.
For Microsoft and Amazon, the two biggest names in cloud computing, the focus will be on growth in Azure and AWS. To put into perspective how important AWS is to Amazon, while it accounted for just 15% of Amazon's total revenue in 2024, it generated over 50% of the company’s operating income. As for Microsoft, the company has a solid track record, having missed earnings estimates only once since 2016. Azure growth will likely determine share price movement after the release, with the market expecting 30% growth and more contribution from AI services.
A key area will also be CAPEX. All these tech giants are committing big capital expenditures throughout 2025: Amazon US$100 billion, Microsoft USD$80 billion, and Meta US$65 billion. Much of that huge spending is on AI and cloud infrastructure, which may weigh on short-term margins but could pay off big over the long term. It can either be rocket fuel or a costly misstep.