The 44th annual G7 Summit is being held in Quebec, Canada. The Group of Seven or G7 is a group of seven of the most advanced economies in the world, namely: Canada, USA, France, Germany, Japan, Italy, and the UK. These seven economies represent 46% of the global GDP based on nominal values. Trade deals with America have been a significant influence on the global economy, mainly due since Trump assumed office.
Before the start of this Summit, there is a pre-existing dispute that France and Canada have with Donald Trump, which has caused tensions because the USA has withdrawn from the Iran deal, and has enforced protectionist policies. Any decisions or events that take place during this summit are likely to affect you if you are an investor.
Having given the background to this upcoming event, US markets have already started to show the effects before even the start of the event. The US futures market has already shown a decline as investors exercise caution.
Slumping US Futures
The S&P Futures was down by 15 points or 0.56% in other words. Meanwhile, other future indices, namely DOW Future and Nasdaq 100 Futures also showed declines of 154 and 72 points respectively. These cautionary changes in investing activities are all on account of the trade tensions between the US remain. Concession in relevant agreements is hard to come by as expected. The Federal Reserve is expecting a rate hike.
Technology stocks were hardest hit in pre-market trading, companies such as Apples showing falling stock prices as iPhone demand fell down. At the same time, Semiconductor Micron Technology also showed 1.81% decline and Snap Inc. fell by 1.48%.
These effects didn’t only pertain to the USA. In Germany, DAX declined by 0.74%, while in France the CAC 40 fell by 6 points. In Brexit affected London, FTSE 100 fell by 45 points, while Spain and other European nations also recorded similar patterns in stock market activity.
The commodities market was coincidently affected inversely as gold futures went up 0.10%.
Factors Investors need to be cautious about on Friday
- The G7 Summit
As discussed above, the summit is likely to bear great effects on the financial markets. Tariffs imposed by the Trump administration are a large factor in considering the future of trade deals with the USA. Hence economic activity is likely to be affected, thus resulting in potential changes in the business activity of different firms. This will in turn affect the performance of the stock market.
- The future of ZTE
Uncertainty continues to prevail regarding this Chinese company operating in the USA. ZTE is a tech company, and as mentioned above, tech stocks were the ones hit the worst. The US government under Trump banned ZTE from buying parts from the USA, and consequently, the company agreed to pay $1 billion in order to be clear of that restriction which hindered their business operations. ZTE, to the surprise of many experts, agreed to sign an agreement with the US government of having supervision in its operations, which enhances the uncertainty in the mind of the experts.
- The management structure changes in BT
BT, the UK media giant has had a big change in its management as its CEO Gavin Patterson. This is due to the poor results from his strategy of cutting 13000 jobs. His plans and results were viewed with skepticism by the shareholders, and have also resulted in weaker profits. Being a large company, there would be major effects due to this movement.
- IMF and Argentina
The International Monetary Fund has agreed to bail out Argentina with a loan worth $50 billion in order to prevent their economy from falling deeper and deeper into a recession. The IMF officially stated on Thursday that a three year deal had been agreed with the Argentine government. The Argentinian government had made the application for assistance about a month ago when their currency showed a huge drop in value. The Argentine Peso had fell against the US dollar by roughly 20% since April.
- The World Economy
A report released by the Bank of England, which was the routine quarterly inflation prediction survey forecasted inflation in UK to be about 2.9% in the coming year. Similarly Canadian unemployment data is to be released today, as well as the Baker Hughes US Oil Rig count report. Therefore, you must consider all this relevant information before making any decisions on the market.
The G7 Summit is the primary source of changes in the stock market performance, and it should also be the major source of your market decisions in the coming days. We have given five essential factors that investors would need to consider. The first factor is apparently the G7 Summit, but the other four are also quite crucial.