If you are looking for growth factors on the market on Thursday, you found them. Today it is worth watching the 3 key political events that are likely to have an impact on world markets. Increased volatility is expected in stock and currency markets.
1. Witness testimony by James Komi to the Senate.
James Komi, the former head of the FBI, will testify before the Senate Intelligence Committee regarding possible links between Trump’s presidential campaign and his communication with the Kremlin on Thursday.
Komi was dismissed from his post as director last month because “chaos was happening at the FBI,” as President Trump says. This decision caught market players by surprise and led to a major drop in the US stock index, securing the worst status of the year for this trading session.
On Wednesday, the Senate published a written testimony of Komi, in which he describes in detail his conversations with the head of state. According to Komi, Trump asked him for “loyalty”
We have (the FBI) was not open to him (Trump) case related to counterintelligence. We conclude that I will do this if circumstances so require.
After that, he (Trump) said that he “needs loyalty.” I replied: “I will always be honest with you.” After a pause, he said: “That’s what I want, loyalty and honesty.”
He said that he had nothing to do with Russia and always assumed that he was recorded during his visits to Russia. He asked what we can do to remove this heavy burden from him.
Trump’s comments can be perceived as interfering with a federal investigation, which is a serious crime and can lead to uncertain consequences for the administration. Fears around this situation have stimulated interest in safe haven assets in recent weeks.
2. ECB meeting on monetary policy.
The European Central Bank is going to hold a meeting on the new policy on Thursday. It is not expected that the regulator will make changes to the current political scheme. However, a softening of the rhetoric is expected, especially one that concerns the questions of the program of quantitative easing.
For the past few months, the ECB President, Mario Draghi, has advocated a quantitative easing program, arguing that improvements in the inflation situation are a temporary factor, supported by rising oil prices. Depending on what is said in the ECB statement, the euro can expect sudden changes.
3. Parliamentary elections in the UK
Investors are waiting for parliamentary elections in the UK for one simple reason: the negotiations on the issue of Brexit. Prime Minister Theresa May announced the early elections to secure support in the run-up to the Brexit talks with European heads of state. However, it is felt that its popularity was influenced by the recent terrorist attacks in the country. The unfavorable state of affairs of the Conservative Party will have a bullish impact on the euro and bearish on the pound sterling.