3 things ASX investors should watch this week

These are the biggest developments in the coming days that could impact your stock portfolio.

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The footy finals reach a climax this weekend, but the action is also heating up for ASX investors.

eToro market analyst Josh Gilbert has helpfully picked out the three biggest events to look out for:

1. Maiden inflation reading under new RBA governor

Wednesday will see the latest monthly consumer price index numbers come out.

Gilbert noted that this measure of inflation, distinct from the quarterly figures, has declined "meaningfully" since peaking last December at 8.4%. Last month it dipped to 4.9%.

"However, that downtrend may stall next week with the expectation for inflation to pick back up marginally to over 5%.

"The RBA has maintained their hiking cycle pause for the last three consecutive meetings, and if that were to change, it would likely be due to an upside surprise in inflation."

The reason for the potential resurgence of the inflation beast could be because of rising oil prices, according to Gilbert.

"This supports the RBA's positioning on keeping the door ajar for further hikes if they deem necessary, should inflation pressures persist."

Funnily enough, financial markets reckon inflation is fine, pricing in only a 50% chance of an interest rate hike this year.

"The good news is that we think the current oil rally self-corrects as higher prices stoke conservation efforts whilst triggering global macro-driven demand slowdown fears."

2. Australia retail trade figures

The latest retail trading numbers will be presented on Thursday.

This will be a huge tip-off as to whether Australian consumers have capitulated in the face of massive mortgage repayments.

According to Gilbert, habits have already changed significantly.

"The lagging impact of rate hikes and cost of living pressures are impacting consumer habits. 

"Consumers are shelving the idea of buying big-ticket items, and other discretionary spending is being dampened by the jump in petrol prices in recent months."

But strangely, how consumers feel and the way they behave aren't "in sync".

"Last month, retail sales increased more than expected, jumping 0.5%, with spending continuing to remain near record levels," said Gilbert.

"One factor impacting this figure is the strong jobs market with consumers feeling confident in their job security, giving some freedom to spend."

So, amazingly, this time Gilbert is actually expecting retail sales to head up again.

"This week's reading is expected to show another increase of 0.2%, but interest rates at decade highs may keep chipping away at the resilient consumer."

3. Results from the ASX 200's 'best performing stock'

The company that Gilbert calls the "best performing" on the S&P/ASX 200 Index (ASX: XJO) is reporting its annual results on Friday.

Incredibly, the Liontown Resources Ltd (ASX: LTR) share price has more than tripled since a trough in July last year.

"The lithium miner has been on a tear since US lithium giant Albemarle Corporation (NYSE: ALB) proposed a takeover at $2.50 a share back in March, which Liontown rejected.

"Albemarle has since sweetened the deal with a 'best and final' offer at $3.00 a share, with the door still open for the takeover to be completed and shareholders to be rewarded — particularly those that bought shares in the 2018 IPO at $0.03 a share."

Gilbert pointed out how other lithium producers, such as Pilbara Minerals Ltd (ASX: PLS) and IGO Ltd (ASX: IGO), reported "record profits and mountains of cash" in their full-year results.

"Liontown investors will be hoping for the same positivity this week."

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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