GERMANY: Merz Faces Trump Oval Office Test
Later today, Chancellor Freidrich Merz faces the most significant foreign policy challenge of his time in office to date: a White House meeting with US President Donald Trump. World leaders' meetings in the Oval Office have historically been seen as a sign of prestige, but since Trump's return to office now carry the threat of a diplomatic ambush as experienced by Ukraine's Volodymyr Zelenskyy and South Africa's Cyril Ramaphosa.
- Trump has previously called out Germany with regard to its trade practices within the EU, with the number of German cars on US roads a particular source of ire. However, Merz will hope his long-standing Atlanticism and commitment to boosting Germany's armed forces will curry favour with the Trump administration.
- Merz is set to arrive at the White House at 11:30ET (16:30BST, 17:30CET). An initial Oval Office meeting takes place 15 mins later, according to the White House press pool. Taggespiegel reports that a post-lunch Oval Office meeting will take place ~13:00ET (18:00BST, 19:00CET).
- The Federal Chancellery has sought to talk up Merz and Trump's “very good relationship". However, tensions over tariffs and support for Ukraine could sour talks.
- Moreover, Germany in particular has come in for criticism from Vice President JD Vance and Secretary of State Marco Rubio for perceived state suppression of the far-right Alternative for Germany (AfD) and for its immigration policies. It is unclear whether either man will be in attendance.
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BOE: Decision on Thursday moved to 12:02BST instead of midday (due to VE Day)
"In light of the national two minutes of silence to commemorate the 80th anniversary of VE day, the Monetary Policy Report and minutes of the Monetary Policy Committee meeting will be published at 12.02pm (BST) on Thursday 8 May 2025, instead of the regular time of 12pm (BST)."
OUTLOOK: Price Signal Summary - EUROSTOXX 50 Support Remains Intact
- In the equity space, the latest recovery in S&P E-Minis reinforces current bullish conditions. The contract has breached the 50-day EMA, at 5622.87. A continuation of the bull phase would expose 5837.25 next, the Mar 25 high and a bull trigger. It is still possible that the entire rally since Apr 7 is a correction. A reversal lower would signal the end of this corrective phase and expose initially, support at 5127.25, the Apr 21 low. First support lies at 5527.21, the 20-day EMA.
- EUROSTOXX 50 futures maintain a positive tone and the contract is holding on to the bulk of its latest gains. Price has recently cleared both the 20- and 50-day EMAs, and attention is on 5263.01, 76.4% of the Mar 3 - Apr 7 bear leg. It has been pierced, a clear break of it would pave the way for a climb towards 5341.00, the Mar 27 high. Initial support to watch lies at 5067.15, the 20-day EMA. Clearance of this level would signal a possible reversal.
GERMANY: Vote Defeat Scuppers Merz Plan For Early Meetings In France & Poland
Defeat for chancellor candidate Friedrich Merz in the first round of voting in the Bundestag is set to scupper his initial plans to travel to Paris and Warsaw in the coming days, in a trip that was viewed as demonstrating Merz's foreign policy priorities amid high tensions with the US over trade and support for Ukraine. Instead, the 'grand coalition' parties will be locked in crisis talks seeking a resolution that could bring about an overall majority for Merz in the Bundestag.
- There has been a flurry of reporting on when the next ballot could take place. The prospect of a second vote taking place today (6 May) is now seen as small, with some reporters claiming Friday 9 May as the most likely day, although tomorrow (7 May) is also an option. ARD reports comments from CSU General Secretary Carsten Linnemann claiming that the latest they want the vote is Wednesday.
- Commerzbank: "...the result of today's vote serves as a reminder of how narrow the majority of the new coalition is, which further dampens hopes for sweeping economic reforms."
- Berenberg: "Merz will most likely still be elected as chancellor in the end. But even so, the unprecedented failure to be elected in the first round would still be a bad start for him. It shows that he cannot fully rely on his two coalition parties. That will sow some doubts about his ability to fully pursue his agenda, damaging his domestic and international authority at least initially."
