Markets are going to have another solid week, as they shrug off weak economic data, political fears and slowing economies in markets such as China, India and Brazil. But Europe is slowly recovering, the US is doing OK, but will probably do better in coming months and the Japanese economy now seems to be rebounding fairly strongly.

Now for one of the more important weeks for the Australian economy and share market in recent memory with the Reserve Bank poised to cut rates tomorrow and a Federal election in the offing.

Apart from the RBA decision and the slew of economic data (see separate story), the week ahead for the local market will be dominated by the step up of Australian June 30 reporting companies releasing the annual results.

Reserve Bank governor Glenn Stevens again sent markets twitching yesterday with comments on interest rates and the dollar that probably left everybody just as confused as they were before his lunchtime speech about what might happen at next Tuesday’s meeting of the Reserve Bank board.

The US Federal Reserve and a full week of data on the health of the American economy will dominate markets around the world this week – with a real chance investors could see a repeat of some of the instability seen in June as the central bank moves closer to starting to slow its extraordinary spending on buying bonds and mortgage securities.

Overseas it’s the Fed and the health of the US economy, here it’s the health of the Australian economy ahead of the vital Reserve Bank meeting next week, and the gathering pace of June 30 financial results.

More of the same for markets this week with the Fed, China and US earnings to set the tone.

Don’t forget the rise in petrol prices this month (up by 20c a litre on some days in some markets) when assessing if the mostly moderate Consumer Price Index data yesterday for the June quarter might allow the Reserve Bank to cut interest rates at its next meeting on August 6.

Hours after the release of the so-called ‘flash‘ release of the monthly HSBC/Markit survey of Chinese manufacturing showing activity at an 11 month low, the country’s government has moved to provide limited stimulus, especially to small business.

A quiet end for the Japanese stock market the day after Prime Minister Shinzo Abe’s Liberal Democratic Party and its coalition ally, the Komeito Party won control of the country’s upper house, thereby opening the way to three to four years of stable government and quite possibly sweeping reforms.

Markets here will ignore them, but the results of yesterday’s upper house elections in Japan will be important not only for our second largest export market, but also for Australian exporters, if only they can focus on them.

Australian inflation news and interest rate speculation will dominate markets here this week, along with corporate earnings and other reports here and in the US.