LONDON The official agenda for Group of Seven finance ministers and central bankers meeting in the Adriatic port city of Bari today focuses on inequality, international tax rules, cyber security and blocking the funding of terrorism.
However, many will be using the two-day meeting to try to come away with a clearer picture of U.S. President Donald Trump's direction on key policies yet to be spelt out. Two in particular are still very much open to question: trade and climate change.
On the former, G20 ministers in March already had to drop their traditional pledge to keep global trade open, bowing to an increasingly protectionist United States. On the latter, Trump - whose gut instinct is to doubt that climate change is man-made - is still to decide whether to pull the United States out of last year's Paris Agreement. Washington has signalled it won't confirm policy on that till after a meeting of G7 leaders later this month, meaning there is time for the Europeans to persuade him to stay in.
Chancellor Angela Merkel's conservatives have pulled ahead of their Social Democrat (SPD) rivals in the western region of North Rhine-Westphalia, according to a new YouGov survey issued before Sunday's state election there.
NRW, as it is known in Germany, is important for two reasons: first, it is huge - its population of 18 million makes it bigger than many European countries; second, it has for decades been a stronghold of the left. If Merkel's CDU can pull off a victory there, it will signal that the popularity bounce which the SPD got earlier this year on the arrival of new leader Martin Schulz has been short-lived.
Today's Q1 GDP figures will be welcome news to Merkel - they ticked up a decent 0.6 percent, driven by higher investment by companies, robust household, state spending and strong exports. That's about as solid a base for growth as an economy can get.
MARKETS AT 0655 GMT
German growth was a robust 0.6 percent in the first quarter of this year, but that has not had much impact on markets. European stocks look set to open slightly higher, index futures indicate, following a dip in Asian shares and a fall on Thursday on Wall Street. Many investors want to know what happens next, in politics and the economy in the United States.
U.S. President Donald Trump’s termination of his FBI chief rattled markets and has some wondering whether the political fallout could affect prospects for Trump pushing through his promised tax cuts and other measures that have powered the reflation trade since the November presidential election.
Market participants will be on alert for any clues to what’s planned from U.S. Treasury Secretary Steven Mnuchin, who will attend a meeting of G7 finance chiefs meeting in Bari.
Later in the day, U.S. retail sales and inflation data will be scoured for clues to the health of the economy. Markets are pricing in an 80 percent chance of a Federal Reserve interest rate increase next month.
The pan-European STOXX 600 index is set to end the week broadly flat, shy of 21-month highs after rallying in the previous two weeks on the back of easing political concerns and surprisingly strong earning updates. Seventy percent of European companies have reported results so far, with 67 percent beating earning expectations and 8 percent meeting them. Year-on-year profit growth in the first quarter is expected at 20.6 percent.
Among companies reporting on Friday, Thyssenkrupp is seen sharply lower after the German industrial group revised its full-year forecasts, saying it now expected negative free cash flow. Cartier owner Richemont will also be in focus after saying it expects the trading environment to stay volatile after net profit slid more than the market expected, but sales growth picked up towards the end of its fiscal year to March.
The session may be enlivened by some M&A news, with Havas in focus after Vivendi said it was making an offer to buy Group Bollore's 60 percent stake in the advertising firm offering a premium of 8.8 percent over yesterday's closing price. United Internet has bid 50 euros per Drillisch share in cash, a small premium over Thursday's closing price.
Other stock movers: Allianz confirms outlook for 2017 after Q1 earnings, Pimco strength; Enel sticks to guidance after Q1 core earnings slip; AstraZeneca's durvalumab shown in trial to reduce risk of death from lung cancer; Total's plans for Brazil's new oil frontier snagged on Amazon reef; ArcelorMittal profits from rise in steel prices, shipments; Innogy says prospects for Npower worsen, won't make profit; EXCLUSIVE-Barclays rejigs global investment banking team, seeks new hires; U.S. judge approves Volkswagen 3.0 litre, Bosch diesel settlements; EU demands urgent talks with Washington over airline laptop ban.
The dollar is ever so slightly lower against its currency basket. The euro is up less than 0.1 percent at $1.0868, the yen is up 0.1 percent at 113.71 and sterling is flat at $1.28886 after the Bank of England’s inflation report on Thursday indicated policymakers saw no rise in rates until late 2019.
German 10-year Bund yields are up about a basis point at 0.43 percent and Italian bond yield spreads remain around their widest in a week.
EM stocks stall after hitting two-year highs and are set to end with a fourth week of gains and most currencies are flat to marginally firmer versus the dollar.
One exception is the Turkish lira, which is down 0.25 percent after police detail 53 former stock exchange employees as part of its crackdown on Gulenists.
Watch for moves in Azeri sovereign Eurobonds, CDS after the country’s biggest state-run bank suspended loan repayments and says it hopes to restructure. Nigerian stocks set for biggest weekly gain since April 2015, having risen 8 percent on expectations of more currency flexibility.
Oil is up again. Brent is 20 cents higher at $50.97. Gold is up 0.2 percent at $1,227 an ounce.
(Editing by Larry King)