London. Following are five big themes likely to dominate the thinking of investors and traders in the coming week.
1/ LET IT GROW, LET IT GROW
Global growth fears are resurfacing. Citi trimmed its 2016 global growth outlook this week to a borderline recessionary 2.4 percent, a figure that could well be below 2 percent if China's data isn't all that meets the eye. That would definitely signal a global growth recession. Investors, economists and policymakers will have a batch of Chinese data next week to wade through, including trade balance, inflation, retail sales, loan growth, FX reserves and industrial production. With the US, Japanese and UK economies all showing signs of strain, the hope is that China can do a bit more of the heavy lifting.
2/ EUROPE'S GETTING WARMER
As the political temperature in the euro zone rises, investors have already started to give the bloc's weak links the cold shoulder. The gap between Italy and Germany's borrowing costs via bond markets is at nine-week highs, while Italian and Spanish shares have suffered the most in a broad equity sell-off. And with a series of potentially disruptive events on the horizon, things are only likely to get worse. The migration crisis is escalating, Greece is no closer to a breakthrough with its creditors on financial aid, and next month Britain is set for a knife-edge vote on EU membership while Spain returns to the polls to try for a breakthrough in its game of thrones.
3/ TURKISH TREMORS
The surprise departure of Turkish Prime Minister Ahmet Davutoglu after weeks of public tensions with President Tayyip Erdogan has roiled Turkish stock markets, slammed the lira and sent bond yields soaring. The change of guard could also threaten a migration deal with Brussels that sees some EU member states grant visa-free travel to Turks in return for Ankara stopping migrants reaching Europe. Investors' nerves are likely to stay on edge until May 22 when an extraordinary congress of the ruling AK Party will elect Davutoglu's successor. Erdogan wants an executive presidency in Turkey to replace the parliamentary system, a plan for which the prime minister had offered only lukewarm support. Davutoglu's departure is likely to pave the way for a successor more willing to back Erdogan's ambition of changing the constitution and strengthening his grip on power.
4/ REALITY CHECK
Equities are on the back foot in Europe and back to double-digit losses on the year. Corporate results remain sluggish. Earnings and revenues for companies that have already reported Q1 numbers have contracted about 8 percent, on average. And European equity funds, market darlings last year, have now suffered their longest streak of weekly outflows since 2008. The biggest beneficiaries of the Feb-March risk-on rebound -- commodity-related stocks -- appear most at risk of a pullback. Metals prices are rolling over, China's credit-fueled demand growth is waning and earnings are not providing much support, leaving valuations look extended again.
5/ WHO'S (G)LISTENING NOW?
Twenty-five years after its inception, the European Bank for Reconstruction and Development holds its annual meeting with the uncomfortable feeling that convergence towards Western led market economy policies may be falling out of fashion. The bank's reach now stretches as far as Mongolia in the east and Morocco in the south, but even in its central Europe heartland, poster child economies like Poland are beginning to tack away from the EBRD's recommended course. It will also elect its president for the next four years, with incumbent Suma Chakrabarti almost guaranteed to see off the challenge of Polish central bank chief Marek Belka.