Let us prepare for another eventful week for ASX shares with the three most critical things to monitor, according to eToro market analyst Josh Gilbert:
1. Xero full-year report
Thursday sees New Zealand accounting software provider Xero Limited (ASX: XRO) release its full-year results.
Gilbert noted Xero shares have phenomenally gained more than 30% so far in 2023.
"Despite this positive start to the year, Xero's share price remains below its peak of $155 during the 2020-2021 tech boom," he said.
"The upcoming full-year results announcement holds significant importance for investors, as they hope it will help reignite the shares and push them towards previous highs."
A new chief executive, Sukhinder Singh Cassidy, started at Xero in February.
"She has outlined a strategy to reduce operating costs and drive profitability, which will be the focal point of the upcoming full-year results, particularly after earnings missed expectations in its half-year results and its net loss widened," said Gilbert.
"The market believes that the new CEO's focus on profitability will pay off, expecting to report a net profit of $3 million for the full year — with revenues climbing by 28%."
2. RBA minutes
After taking a rest in April, the Reserve Bank resumed its interest rate hiking cycle this month.
The release of the board minutes this week will provide an insight into its thought process.
The worry for ASX shares is whether the central bank will continue with its hawkish attitude.
"If the board continues to signal the possibility of 'further tightening to monetary policy', it may lead to market weakness since the market is now pricing in rate cuts by October," said Gilbert.
"However, any shift in language to hint that the end of the rate hikes could be in sight will be well received by the market."
The Reserve Bank has an unenviable job trying to maintain a delicate balance.
"The RBA will walk a fine line between outlining that previous tightenings will begin to have their effect whilst still signalling that inflation is still too high," Gilbert said.
"If the RBA gives an inch, the market will take a mile."
3. Chinese giants due to report financials
Gilbert reckons investors will be looking to the latest numbers from a couple of tech giants in the second-largest economy in the world and Australia's largest trading partner.
Tencent Holdings Ltd and Alibaba Group Holding will hand down quarterly earnings on Wednesday and Friday, respectively.
"Expectations are low… Alibaba's sales growth is set to come in under 3%, and Tencent will still report single-digit growth, a stark contrast from the years of 20%+ revenue growth," said Gilbert.
But the recent reporting season in the United States showed that low expectations could trigger upside stock price surprises.
"Despite plenty of optimism from the re-opening in China, consumers are still reluctant to spend with worries over an uncertain economic outlook, and that hasn't lived up to expectations that stocks priced in at the start of the year."
