UK election, ECB rate meeting
A look at some of the big stories in the coming week with Josh de la Mare, including the impact of the UK election on the EU's negotiation plans for Brexit, European Central Bank rates meeting and first-quarter results from Alphabet/Google, Microsoft and Intel.
Studio filmed by Rod Fitzgerald, Nicola Stansfield and Petros Gioumpasis. Images from Getty. Written by Henry Mance, Duncan Robinson, Leo Lewis, Claire Jones and Richard Waters.
Hello and welcome to The Week Ahead from the Financial Times in London. Here are some of the big stories we're watching this week. Theresa May's call for a snap UK election sharpens the focus of EU negotiators meeting on Saturday. US technology giants Amazon, Microsoft, and Google reveal their first quarter results, and the European Central Bank decides what to do next on interest rates.
Theresa May, Jeremy Corbyn, and Tim Farron, the leaders of the Conservative, Labour, and Liberal Democrat parties, will hit the campaign trail with 45 days to go before the snap UK general election. The UK election will be on the agenda on Saturday in Brussels at a meeting of 27 EU member states discussing how to handle the Brexit negotiations. The summit will be the first official response from heads of governments across the EU since Theresa May triggered Article 50 last month. Although Britain is set to enter a fierce general election in June, the EU is pushing on with its schedule, aiming to sign off its negotiation guidelines at the summit before talks in June. Brexit Editor Daniel Dombey says the focus will be on how much room for manoeuvre Theresa May has.
This is going to be a Brexit election, and Britain's soon-to-be former European partners know that. Now, they know this is likely to labour talks. Now it will be a little bit later than June the 8th. Mrs. may argues that she'll be able to get a better deal for Britain because of this election. The Europeans know that she may be able to have more room to manoeuvre to get what they would see as a more realistic deal, and which some Brexiteers might see as a betrayal, if she has a democratic mandate of her own.
However, the big question is what's in the conservative manifesto? That may constrict Mrs. May as to what she can promise in the meantime, the Europeans are already hardening their position on things like citizens' rights, the European Court of Justice, and many other things going forward.
Staying with Europe, policymakers from the European Central Bank are set to meet in Frankfurt on Thursday to decide what to do next to shore up the eurozone's economic recovery against the backdrop of the French presidential elections. The ECB is expected to avoid any major policy changes. Claire Jones, Frankfurt Bureau Chief, explains why.
It's because the recovery remains broadly on track. The European Central Bank is already doing quite a lot too. Interest rates in the region are at record lows, and they're also buying around $60 billion euros worth of bonds each month under their quantitative easing programme. That QE programme is expected to remain in place until the end of this year at least to shore up growth and boost inflation.
Now, if there's a shock result in the first round of the French presidential election, and Le Pen a Melenchon win, that might lead to a reassessment of risks from the European Central Bank. They may say risks are more skewed to the downside because of that result.
A decision not to change policy on interest rates is also expected to emerge from the Bank of Japan's two-day meeting this week. Market scrutiny will instead fall on the bank's inflation outlook. Potential hints of tightening down the line, and any adjustments to its Japanese government bond purchasing programme.
In Japan, Sony is expected to see a rebound in profits when it releases figures on Friday. after a year shaken by earthquake damage and a $1 billion write down on its film business. Its results come a day after the four global technology leaders worth a combined $1,700 billion unveiled quarterly earnings.
Amidst a period of heavy investment in new markets, attention will be on the underlying earnings power of Alphabet Google, Amazon, Microsoft, and Intel. The recent fallout from a partial advertiser boycott of YouTube is likely a spearpoint of focus. Google's Matt Brittin was forced recently to apologise about offensive content appearing next to adverts.
I think it's entirely right for advertisers to look at what's going and make their own decisions informed by the facts, as while as what they're reading in the press, but also by digging more deeply into the facts, and I think that's right and appropriate. And as I said, I take responsibility for it. We need to work with the industry to make things better. Each and every advertiser will help him to improve. And we'll also improve our defaults.
Investors will also be on the lookout for evidence from Google that newer business, like YouTube and cloud computing, are gaining momentum. Amazon is also expected to report slowing revenue growth, particularly as a rapid expansion of its cloud computing division moderates. West Coast Editor Richard Waters has more.
For Alphabet, the parent of Google, Amazon, Microsoft, Intel. They're all very different companies, but their core businesses should look strong this quarter. There'll be a lot of attention to YouTube, given that advertisers have been angered about how it's been placing its advertising. But Google's search business should still look pretty good. And I think for these other companies too, the PC market even might be growing again for the first time in five years, which is good for Microsoft and Intel.
And that's where the week head looks like from the Financial Times in London. Goodbye.