US banks' results, China's growth, G7 meeting, Moon landing - 50 years on
The FT's Veronica Kan-Dapaah on some of the top stories the FT will be watching this week, including the latest earnings from leading US banks, GDP data from China, a meeting of finance ministers and bank governors from G7 economies, and the 50th anniversary of the first Moon landing
Produced by James Sandy. Written by Clive Cookson, Simon Greaves, Victor Mallet and Veronica Kan-Daapah
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Here are some of the stories we'll be watching this week. Investors will be looking out for second quarter earnings results from the big six US banks. We'll have the latest round of economic growth data from China. France prepares to host the latest meeting of G7 finance ministers. And we'll be looking back at 50 years since the first moon landings.
First up, Citigroup kicks off earnings season for US banks on Monday. By the end of the week, four of Wall Street's top names will have reported numbers for the second quarter. The results follow a buoyant first quarter, which saw the sector as a whole record more than $60bn in profits. Performance amongst the big six US banks was mixed, however. Goldman Sachs and Citigroup figures were underwhelming in contrast to upbeat earnings from JPMorgan. The latest results come after news from Deutsche Bank last week that it will significantly reduce its investment operations. Our US banking editor Laura Noonan has more.
The big focus will be around interest rates. So we've just had the chairman of the Fed once again talking about the prospect of interest rate cuts. This is bad news for banks. They make more money when interest rates are higher. So banks will face a lot of questions on how their operations are going to perform and what they can do to really cope with what looks like a lower for longer interest rate environment yet again.
The other big area of focus is going to be around banks, investment banking and their trading operations. We've already had guidance that it hasn't been a great quarter for trading. We're expecting most banks report falls in their trading revenues are somewhere between 8 per cent and 10 per cent. Investment banking is interesting because that is where you'd really see the early signs of any strain from all this talk around the trade wars because if companies believe there is going to be a trade war, that make them less likely to do M&A deals.
Now to China, where second quarter gross domestic product data will be released on Monday. The Chinese economy grew faster than expected during the first three months of the year. Government policies helped stabilise growth, while surging industrial production in March also provided a boost. At the same time, US President Donald Trump backed down from his threat to escalate the ongoing trade war with Beijing. The FT's Lucy Hornby has this analysis.
LUCY HORNBY: Chinese statistics are something of an art form, but the quarterly GDP numbers do symbolise the strength of the overall economy. This time, the data will be scrutinised for any sign that the trade war is starting to bite. Most people expect second-quarter GDP to soften after a pretty brisk first quarter. Back then, there was a lot of liquidity in the system, and housing investment was strong.
But in the second quarter, trade tensions with the US peaked in May and June, and many manufacturers and exporters may have been cautious about investing. Beijing has been propping up the real economy with stimulus measures. We'd expect that to continue well into the third quarter and probably for as long as the trade war continues.
Finance ministers and central bankers at the G7 will meet just outside of Paris this week. French officials say this year's main objective is to look at how capitalism can be made fairer. The country's proposing more financing for Africa and has urged the G7 to accelerate its transition to a lower carbon future. Here's the FT's Paris bureau chief Victor Mallet.
Well, a lot of concerns about a slowdown in the world economy. There's concerns about trade wars. There's concerns about real wars with Iran, for example. And behind all this, you have the unpredictability of Donald Trump. And then on top of that, you have deep concerns about monetary policy, which, again, is becoming even more ultra loose, going back to a phase of extreme monetary accommodation, and that poses enormous risks.
You've got European governments, for example, that are borrowing at negative interest rates. Essentially, they're being paid to borrow money. And the fear is among economists that you're having a build up of debt not only among sovereigns, but among companies and, of course, individuals, and that when interest rates eventually rise, that's going to cause a potential huge debt crisis.
And finally, this Saturday will mark the 50th anniversary of the first successful moon landing. Nasa plans to celebrate the 1969 manned mission with a concert at the Kennedy Centre in Washington. The event will feature unseen footage from Nasa missions and a video of David Bowie performing his song Space Oddity. Our science editor Clive Cookson has been reflecting on the 50-year history of manned spaceflight.
Sadly, no human beings have been further than low Earth orbit since 1972, when the last astronauts went to the moon. I think there will be a new impetus to send astronauts and, indeed, cosmonauts further out again. The US administration wants to put people back onto the moon by 2024 - I think that's very overoptimistic - and then send people on to Mars. Whether that'll happen in my lifetime, I very much doubt. It is rather sad because when I watched the first moon landing as a boy, I was sure that I'd get to Mars, at least in middle age, and it's not going to happen.
And that's what the week ahead looks like from the Financial Times in London.