Last week saw markets treading cautiously as investors digested a flurry of earnings reports and economic data. In the US, equities struggled to stay in the green for most of the week, with the Nasdaq, S&P 500 and Dow all ending lower. The Russell 2000 index of small-cap stocks, however, managed to outperform, rising nearly 3% for the week and sparking talk of a potential rotation away from mega-cap tech names.

On the earnings front, results were mixed. United Parcel Service saw weaker-than-expected revenue and pared back its outlook. General Motors also struggled, with investors focusing on eroding market share in China despite strong domestic demand. However, some companies delivered strong results. Lockheed Martin and GE Aerospace both saw their shares jump after raising profit outlooks and reporting robust demand. Spotify also surged after posting its second consecutive quarterly profit. 

The main focus, though, was on the tech giants known as the "Magnificent Seven." While headline numbers from Alphabet and Tesla beat expectations, their forward guidance spooked investors. Tesla's shares slid 12% after the company reported a delayed robo-taxi rollout, sparking a broader rout in the tech sector.

Economic data also presented a mixed picture. The US economy grew a robust 2.8% in Q2, well above expectations, allaying some recession fears. However, signs of weakness persisted with durable goods orders falling sharply in June and personal income and spending both declining. Core PCE inflation, the Fed's preferred measure, ticked up slightly to 2.6% but in line with expectations, and the "core-core" reading stripped of imputed costs decelerated. All in all, a US soft-landing is still in sight.

In contrast to the US, data out of Europe was more uniformly bleak. Flash PMIs for July showed a notable slowdown, especially in Germany where both manufacturing and services slipped into contraction territory. The German Ifo Business Climate index also deteriorated, reflecting worsening sentiment.

On the policy front, the Bank of Canada cut rates as expected, though it remains unclear how many more cuts are in store this year. Speculation is mounting that the Fed may follow suit in September given the economic crosscurrents, with some like ex-NY Fed President Dudley arguing they should move as early as this week to get ahead of a potential downturn.

Looking ahead, the coming week is packed with key events that could sway markets:

- Central bank decisions from the Fed, Bank of Japan and Bank of England. The Fed is expected to hold steady this meeting but solidify expectations of a September cut. The BOJ may finally adjust policy given political pressure and evidence inflation is taking hold.

- A slew of key economic releases including US jobs data, ISM manufacturing, and inflation prints here in Australia. These indicators will be closely parsed for signs of labour market cooling and disinflation.

- Another big week of earnings featuring Apple, Amazon, Meta and Microsoft. After last week's disappointments, investors will be keen to see if the tech rout spreads or if these market leaders can reassure their future prospects.