🔍 The focus this week: Markets on the edge

👀 Markets have been stuck in a range lately – too jittery for a breakout, too stubborn for a breakdown. Investors haven’t quite made up their minds about which way things are headed, and lately, it feels like price action hinges more on vibe than hard-and-fast fundamentals. But it could soon be time to snap out of that. This week brings a one-two punch of potential wake-up calls: the Federal Reserve (Fed) will make a key interest rate announcement, and a wave of companies will deliver quarterly updates. And those things could help investors decide whether the next move for stocks is up… or very much down.

🧨 The Fed’s mid-week decision probably won’t set off any fireworks – the central bank is widely expected to hold interest rates steady. But the tone from the Fed chief could be a market mover. Investors have their hearts set on seeing a few cuts this year, but inflation seems to have stopped falling, and new tariffs could send them higher again. That puts the Fed in a tight spot, even before you factor in any political pressure it might face: higher interest rates are the best tool for taming hot inflation, but they also can exact a heavy toll on markets and the economy – and so can those tariffs.

🔦 From the earnings side of things, Disney, Uber, Shopify, Ford, and Palantir will shine a bit more light on how companies and consumers are holding up. And results from AMD, Super Micro, and ARM will offer a view into how the AI trend is faring. And, frankly, they might all deliver solid reports: a lot of the market’s biggest names have met expectations so far, for the period that doesn’t entirely reflect the tariff turmoil. But a lot of firms have also delivered lower profit forecasts – and that, more than the latest quarter’s results, could shape how investors position from here.

📅 On the calendar

• Monday: US Services PMI (April). Earnings: Palantir, Ford, Vertex.
• Tuesday: Earnings: Advanced Micro Devices, Lemonade, Lucid Group, Rivian, Super Micro Computer, Upstart.
• Wednesday: Federal Reserve rate announcement. Earnings: Barrick Gold, Fiverr, Novo Nordisk, Uber, The Walt Disney, AMC Entertainment, ARM, Occidental Petroleum.
• Thursday: Bank of England rate announcement. Earnings: Shopify, Cloudflare, Coinbase, Pinterest, Trade Desk.
• Friday: China balance of trade (April).

👀 What you might’ve missed last week

🇺🇸 The US

The American economy shrank for the first time in three years, contracting by 0.3% in the first quarter on an annualized basis, after a 2.4% expansion in the quarter before. That contrast seems stark, but there’s some nuance in here. The drop was mostly down to companies rushing to import goods ahead of President Trump’s new tariffs – and since imports are subtracted in economic growth calculations, that made the data look worse than it really is. Look a bit closer, and consumer spending and business investment held up pretty well. Still, inflation remained hot, and the real question now is what happens next: as the tariff impact starts to hit prices and demand, the next few months could get more uncomfortable.

Earnings season’s been a mixed bag – but these days, mixed isn’t half bad. Big Tech’s come through so far, with Microsoft, Meta, Amazon, Apple, and Alphabet reassuring investors that growth hasn’t vanished just yet. But the consumer story is clearly shakier as tariff policies dig their claws into companies and the economy: PepsiCo and Procter & Gamble have trimmed their forecasts, travel firms are seeing getaways go unsold, and carmakers are warning about price hikes. Still, the fact that quarterly results so far haven’t been outright gloomy has been enough to hold markets in place – for now, “not terrible” counts as good news.

🇪🇺 Europe

Europe’s economy grew by an annualized 0.4% in the first quarter – a pretty unremarkable number on paper, but its fastest pace in nearly a year and considerably better than what the US put up. That irony wasn’t lost on investors: after years of lagging behind America, Europe raced ahead just as tariffs kicked in. Of course, it’s not all sunshine and roses: the growth was helped out by a pre-tariff export rush, and the mood’s already shifting. European carmakers are lowering their forecasts and the ECB is considering some economy-perking interest rate cuts as the full tariff impact starts to bite. So you’ll just have to wait a bit longer to see which way things go.

🇨🇳 China

Alibaba launched its Qwen3 open-source AI models – and claimed they’re not only smarter than rivals in math, coding, and reasoning, but also cheaper to run. That was big news for China’s tech sector, which has been hammered lately by tariffs and general skepticism. Now, if Qwen3 can deliver on both performance and cost, it could help China’s tech giants claw back some market share and investor confidence – potentially resetting the playing field.