North Korea meeting, UK data and US bank results
The FT's Vanessa Kortekaas highlights the key stories to watch for in the week ahead, including an annual meeting of North Korea's parliament – ahead of historic summits with South Korea and the US – and results from major US banks.
Produced by Vanessa Kortekaas. Filmed by Petros Gioumpasis. Still images by Getty.
Hello, and welcome to The Week Ahead from the Financial Times in London. Here are some of the big stories we'll be watching in the coming days. The spotlight will be on North Korea's parliament ahead of two historic summits. We'll find out how the UK economy has fared in the first quarter and how much US banks benefited from market volatility.
Let's start in North Korea, where its parliament is set to hold its annual meeting on Wednesday, just weeks ahead of the planned summits with South Korea and the US. The Supreme People's Assembly is North Korea's highest state institution, but typically it rubber stamps decisions on issues like the national budget, which are made by the state's powerful Workers' party. This year's assembly is drawing particular interest around whether the regime will send any messages ahead of the historic summits.
North Korea's leader, Kim Jong Un, is due to meet his South Korean counterpart, Moon Jae-in, in late April and US President, Donald Trump in May, where he is expected to discuss the denuclearsation of the Korean peninsula. Here's our chief foreign affairs columnist, Gideon Rachman, with more on the upcoming summits.
On the face of it, it sounds very promising that Kim Jong Un, the leader of North Korea, is talking about the denuclearisation of the Korean peninsula. You have to be a little bit cautious though, because his view of how that should happen would involve the removal of American troops, for example, from South Korea. And there's no sign that the Americans are prepared to do that.
Nonetheless, this is clearly a crucial diplomatic moment that we're living through. He's had his first visit overseas to see China, a country that essentially has a stranglehold over the North Korean economy and therefore can put a lot of pressure on him. He's about to have his first summit with the South Korean leader. And then he's meeting Donald Trump, which will be an incredible circus, a very dramatic event. It's hard to see, given the country's formal positions, how they will find a way around. But simply the fact of all of these meetings opens up the prospect that something new and dramatic might be about to happen.
Now in the UK, we'll have a raft of data coming out that will give the most important sign yet of how the economy has fared in the first quarter of this year. After being the weakest performing nation in the G7 last year, the question is whether there has been a recovery or whether growth rates are still in the Brexit doldrums. We'll get some insight when official data for construction, manufacturing, and production for February is published.
Data for these sectors are normally a guide to the overall economic growth rate between December and March. And if the UK's gross domestic product rises above 0.5%, then the hangover from the vote to leave the EU will be said to be passed. But if quarterly GDP rises are below that level, then predictions that the UK economy will struggle to expand faster than 1.5% a year will gain credibility. Here's our economics editor Chris Giles.
The sectoral data we're going to get this week is likely to show a contradictory position for the UK economy. Manufacturing is probably going to be very strong. It's been strong for the last six months or so. Construction is likely to be pretty weak. It has also been pretty weak as sort of big building projects have come to an end.
Now, add that together with some of the survey evidence we've had from March showing that snow had a big effect from the economy in March means that the Bank of England has got a whole mess of data it's going to use when making its interest rate decision in May. Most likely, the bank will still raise interest rates from 1/2 a percent to 3/4 of a percent on the 10th of May. But there's some doubt of that if the data comes in this week worse than expected.
And finally, the return of volatility in the markets is one good reason to look out for solid results from some of the biggest US banks this week. On Friday, JPMorgan Chase and Citigroup are both due to report their quarterly results. Goldman Sachs is expecting total revenues from stock and bond trading at the big Wall Street banks to rise by 6% from a year earlier. Here's Alistair Gray, our US financial correspondent.
So it's been a tricky time for investors in financial markets. We've seen swings in asset prices that we haven't seen for some time. But that should be good news for the big Wall Street investment banks, which get a cut each time investors place a trade. And things are looking brighter also in the retail divisions because higher interest rates should allow the lenders to charge borrowers more.
So it's all shaping up to be quite a positive quarter for the big US banks. I would caution that expectations going into the results are really quite high. The shares and the big buying have sort of ticked down with the wider market recently. But they're still out very strongly, especially over the past two years. Shares in S&P 500 US banks are up 60%, so there isn't really much room for slip-ups.
And that's what the week ahead looks like from the Financial Times in London. See you again next time.