According to analysts at Danske Bank, in the UK, key focus is on the Conservative Party's response to the results of the European parliamentary elections today.
“The Conservative Party is likely to suffer a heavy defeat and Nigel Farage's new Brexit Party may be the biggest party of all. It is highly likely that the defeat would cause Prime Minister Theresa May to resign.”
“In the euro area, we will get both the flash PMIs and German ifo for May, as well as the ECB minutes form the April meeting. We see scope for a very limited rebound in the manufacturing PMI to 48.3 on the back of the improving order situation in the April survey. However, the latest negative developments in the trade negotiations between the US and China will weigh on the PMIs going forward and a dent in business expectations might already be visible in today's German ifo print.”
“The ECB minutes from the April meeting may prove uneventful for the market. While we are interested in the discussions on inflation and the growth outlook, we doubt there will be any new colour on this, or on the potential 'tiering system' and the upcoming TLTRO3 modalities.”
“In the US, we also get the Markit preliminary PMIs for May, which should give us a clue to how growth has performed in Q2. Recently, manufacturing PMIs have added to the signs that the economy is set to slow and that the manufacturing sector is not immune to what happens in the rest of the world.”
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