Investing.com - Europe is likely to set the tone for global financial markets this week, with the French presidential election and European Central Bank policy meeting on investors' minds.
Elsewhere, key U.S. economic reports this week should provide further evidence if the world’s largest economy is strong enough to withstand higher borrowing costs in the months ahead, with Friday's GDP data in the spotlight.
Meanwhile, in the U.K., market players will pay close attention to a first estimate of U.K. first quarter GDP for further signals on the continued effect that the Brexit decision is having on the economy.
Investors will also focus on a monetary policy decision due in Japan
Ahead of the coming week, Investing.com has compiled a list of the five biggest events on the economic calendar that are most likely to affect the markets.
1. French Presidential Election
The first round of the highly-anticipated French Presidential Election will be held on Sunday. Exit polls are expected to be released at 18:00GMT (2:00PM ET), with the final vote count due in early Europe on Monday.
Polls make centrist and pro-European candidate Emmanuel Macron the slight favorite. His three close rivals, according to voting surveys, are the anti-EU, anti-immigration National Front leader Marine Le Pen, who would dump the euro currency and return to national ones, far-left candidate Jean-Luc Melenchon, who wants France to rip up international trade treaties and quit NATO, and the conservative Francois Fillon, whose reputation has been sullied by a nepotism scandal.
The base case among many analysts is that Macron and Le Pen will emerge as winners in the first round of the election, with Macron likely to go on to win the second round run-off on May 7, but few experts dare rule out a shock result, especially with a large number of undecided voters.
Polls in the dying days of the campaign put all the candidates roughly on between a fifth and a quarter of the vote, with around five percentage points or less separating them, making the race too close to call.
Investors are fearful over the prospect of a second round run-off between euro skeptics Le Pen and Melenchon.
2. European Central Bank Policy Meeting
The European Central Bank's latest interest rate decision is due at 11:45GMT (7:45AM ET) on Thursday, with most not expecting any change in policy despite recent indications of robust growth and surging inflation.
Most of the focus will likely be on President Mario Draghi's press conference 45 minutes after the announcement. He will probably avoid any discussion about winding down asset buys, instead sticking to his stance that the recent surge in inflation is temporary, growth is fragile and political risks clouds the outlook, requiring stimulus.
A recent Reuters poll found that the ECB will stay in the background through upcoming elections in key European countries and is only likely to signal a shift away from its ultra-easy monetary policy toward early next year.
Besides the ECB, the euro zone will publish flash April inflation figures on Friday. The consensus forecast is that the report will show consumer prices rose 1.8%, accelerating from a gain of 1.5% in March. Core prices are expected to increase 1%, compared to 0.7% in the prior month.
Spain, France, Italy and Germany will produce their own CPI reports throughout the week.
3. U.S. Advanced 1st Quarter Growth Data
The U.S. is to release preliminary figures on first quarter economic growth at 8:30AM ET (12:30GMT) Friday. The data is expected to show that the economy expanded at an annual rate of 1.1% in the first three months of 2017, easing from growth of 2.1% in the fourth quarter.
Besides the GDP report, this week's calendar also features U.S. data on consumer confidence, new home sales and durable goods orders.
A recent batch of disappointing data on employment, retail sales and inflation prompted market players to trim their bullish bets on the U.S. economy and push back expectations for two more hikes this year, according to Investing.com’s Fed Rate Monitor Tool.
Headlines from Washington regarding health care reform, tax cuts and a possible government shutdown will also be in focus.
On Friday, Trump promised a big announcement about tax reform and said he hoped to see a health care vote when Congress comes back in the coming days.
There are also about 190 S&P 500 companies reporting earnings this week, the biggest profit-reporting week in at least a decade. Thursday will be the busiest day with nearly 70 reports due, including updates after the closing bell from Alphabet (NASDAQ:GOOGL), Amazon (NASDAQ:AMZN), Intel (NASDAQ:INTC), Microsoft (NASDAQ:MSFT) and Starbucks (NASDAQ:SBUX).
4. U.K. Preliminary Q1 GDP Figures
The Office for National Statistics is to produce preliminary data on U.K. economic growth for the first quarter at 08:30GMT (4:30AM ET) on Friday.
The report is forecast to reveal the economy grew 0.4% in the January-March quarter, after expanding 0.7% in the preceding quarter, underlining worries that Britain's economy is slowing just as it prepares to start negotiations to leave the European Union.
On an annualized rate, the British economy is expected to grow 2.2% in the first quarter, up slightly from growth of 1.9% in the previous three-month period.
Recent data has pointed to signs that rising inflation is crimping spending by consumers, the main drivers of the economy, just as Prime Minister Theresa May begins Britain's EU divorce talks.
5. Bank of Japan Monetary Policy Decision
The Bank of Japan is seen keeping its short-term policy interest rate at minus 0.1% when it releases its latest rate decision and monetary policy statement at around 03:00GMT Thursday (11:00PM ET Wednesday).
The central bank is also expected to hold the 10-year government bond yield target at around 0%, while maintaining the net amount of Japanese government bonds it buys annually at around 80 trillion yen, as it waits for more evidence of a modest economic recovery.
BOJ Governor Haruhiko Kuroda will hold a press conference afterward to discuss the decision. Kuroda recently reiterated the central bank's resolve to maintain its massive monetary stimulus until inflation is stably above its 2%.
Stay up-to-date on all of this week's economic events by visiting: http://www.investing.com/economic-calendar/