On Thursday, April 27, the market is anticipating data releases and political news that could potentially impact the global financial landscape. Here is a comprehensive overview of the important events taking place today.
The US Bureau of Economic Analysis’ will release its first estimate of first quarter Gross Domestic Product (GDP). Consensus among analysts suggests that there will be a modest increase, with an annualized growth rate of 1%. Previously, the fourth quarter GDP of 2016 demonstrated an increase of 2.1% and therefore, a deceleration in growth in the first quarter may pressure the Trump administration to introduce more significant fiscal measures. Specifically, the release of weak GDP data could encourage President Trump to follow through with proposed tax reform and infrastructure spending, in order to spur economic growth.
On the political front, expectations are high as markets eagerly await the results of the French elections. With the first round complete, centrist Emmanuel Macron and far-right candidate Marine Le Pen are facing off in the second round of elections to be held on May 7. Investors are now pricing in the possibility of a Macron victory, which many believe would avert the potential economic upheaval and market volatility that Le Pen’s protectionist policies could bring. Furthermore, Macron’s lead in the polls has driven European stocks to a 20-month high.
President Trump is also set to meet with Argentine President Mauricio Macri to discuss various issues including trade, security, and the crisis in Venezuela. This meeting comes as the South American country faces an increasing crisis involving political unrest, a humanitarian emergency, and a collapsing economy. The US may be required to provide assistance to Venezuela, and this partnership with Argentina could be instrumental in a combined effort to manage the chaos in the region.
International trade will continue to be the focus of Trump’s economic ambitions, as he takes further steps to address what he perceives to be an unbalanced trading environment. Trump has previously criticized major trading partners, including China and Germany, for having an unfair advantage and has threatened to introduce trade barriers if these issues are not resolved. The recent announcement by the Trump administration regarding its plans to renegotiate the North American Free Trade Agreement (NAFTA) with Mexico and Canada is evidence of his determination to make significant changes to international trade dynamics.
The European Central Bank (ECB) is also on the agenda for today, as President Mario Draghi is scheduled to hold a press conference following the ECB Governing Council meeting. Market participants will be focusing on any hints of adjustments to the QE program, as well as any changes to the ECB’s future plans in terms of monetary policy tightening. Furthermore, the ECB is expected to maintain its ultra-loose monetary policy for the foreseeable future, given the remaining risks associated with European politics and the still fragile state of some sectors in the economy.
In Germany, the labor market appears to be showing signs of a strong and steady recovery, as new data reveals unemployment in the country has dropped to its lowest level since reunification in 1990, emphasizing Germany’s increasing economic strength. The German labor agency reported the number of people out of work diminished by 15,000 which surpassed previous predictions of a decrease of 11,000. The unemployment rate is now at a record low of 5.8 percent. The improvement of the labor market outlook has interesting implications for the ECB’s decisions regarding its monetary policy, particularly the continuation of its quantitative easing program.
On the public holiday front, Japan, New Zealand, and Australia will be celebrating various national holidays, leading to the closure of several financial markets in these regions.
The resignation of UK member of Parliament Andrew Tyrie from his role as head of the influential Treasury Select Committee has also been announced, as he decided to step down from this position at the upcoming election in June. Tyrie has been a major power player in today’s financial policy and regulation environment and has conducted several high-profile investigations that were instrumental in reforming both the banking industry and the Bank of England.
In summary, today’s pivotal events include the release of US GDP data, high expectations surrounding the French elections, an important meeting between President Trump and Argentine President Macri, the Trump administration’s continued focus on international trade policies, the ECB press conference, and staffing changes in the UK political scene. These events, combined with various other global affairs, continue to shape the financial landscape and impact markets around the world.
