Investors will keep a close eye on US politics next week as US President Donald Trump’s first foreign trip coincides with a growing White House scandal at home.
Here’s what to watch in the coming days.
Donald Trump kicks off his first overseas visit since becoming US president by travelling to Saudi Arabia at the invitation of Saudi King Salman bin Abdulaziz this weekend. Mr Trump is set to agree to a $10bn weapons sale to Saudi Arabia as the US seeks to boost business and diplomatic ties with Riyadh.
The nine-day tour will also see Mr Trump visit Israel and continue on to Rome before heading to a Nato summit in Brussels. The meeting comes as the president’s attempts to give Nato a more formal role in the anti-Isis coalition has faced resistance from France and Germany. Mr Trump will also attend a G-7 meeting in Sicily.
The overseas trip comes with Mr Trump under siege at home following revelations that he pressed James Comey, the FBI director who was abruptly dismissed last week, to drop a probe into the Trump administration’s ties with Russia. Mr Comey has been invited to testify before Congress on Wednesday.
Further complicating matters, new Russia claims were published just after Mr Trump departed Washington on Friday, casting more clouds over the trip even as it got underway.
The Federal Reserve said at its last monetary policy meeting that the slowdown in the US economy was likely to be temporary and signalled that it remained on course to raise interest rates in June.
On Wednesday, investors will get the opportunity to parse the minutes of the Fed’s May 2-3 meeting. They will be on the lookout for clues on the timing of the next rate move and discussions about when the Fed could begin unwinding its $4.5tn balance sheet.
“The May FOMC statement surprised with the extent it downplayed the recent weakness in economic data as transitory, leaving the door open to a June hike,” strategists at TD Securities noted.
“We look for the minutes to reinforce a hawkish, optimistic message on labor market slack and the growth outlook, as well as revealing additional planning for the end to the reinvestment policy. However the reaction may be muted should the markets view the minutes as ‘old news’.”
Opec members and their allies gather in Vienna on Thursday to discuss whether to extend an agreement to curb oil output. Saudi Arabia-led Opec and Russia, which is not an Opec member, agreed last year to curb supply by 1.8m barrels per day for six months. Both have backed extending the agreement to cut output until March 2018.
The meeting is likely to be drama-free, with Opec and Russia expected to extend their production cuts by six to nine months.
“With many member countries already experiencing large government and current account deficits at current oil prices, neither lower prices nor a permanent loss in output are appealing options,” said Francisco Blanch at Bank of America. “As a result, we believe that OPEC will stay the course, keeping production on hold over 6 to 9 months and hoping that demand improves.”