US economy

Week ahead: China trade talks, US budget deadline, earnings


Worries over global economic growth and fading optimism the US and China will strike a trade accord resurfaced have weighed on global markets in recent days. Trade talks are set to continue in Beijing this coming week, while another barrage of corporate earnings will also be on investors’ radar.

Here’s what to watch in the week ahead:

US-China trade talks

US trade representative Robert Lighthizer and Treasury secretary Steven Mnuchin will lead a group of officials from the Trump administration who are travelling to Beijing for negotiations with their Chinese counterparts.

The meetings, due to start on Monday, will occur two weeks after Chinese officials visited Washington for a round of talks as the world’s two largest economies seek to hash out differences over trade, tariffs and China’s economic policies. US president Donald Trump and Chinese president Xi Jinping reached a 90-day truce that expires on March 1. If the deadline passes without a deal, Mr Trump has said he could follow through on his threat to increase tariffs on Chinese goods.

Mr Trump worried Wall Street when he recently said he would not meet Mr Xinping before March 1, after previously saying the US and China will not finalise a trade deal before the two leaders have another face-to-face meeting. Meanwhile, White House economic adviser Larry Kudlow, when asked about the talks during a Fox Business interview, cautioned that “we’ve got a pretty sizeable distance to go here.”

During his State of the Union address on February 5, Mr Trump said a trade deal with China “must include real, structural change to end unfair trade practices, reduce our chronic trade deficit and protect American jobs.”

US budget deadline

Mr Trump and congressional lawmakers have until Friday to agree on a budget deal to avert another partial shutdown of the federal government.

The government closed for a record 35 days from late December to late January, when Mr Trump signed a three-week spending bill that temporarily reopened agencies. However, another shutdown looms this week, as Republicans and Democrats try to resolve differences over immigration and a $5.2bn proposal to extend a wall along the US-Mexico border.

Mr Trump has said he may declare a national emergency to build the wall if a deal with Democrats doesn’t materialise.

Earnings

A spate of closely followed companies will report quarterly financial results during the week. Earnings from chipmaker Nvidia, which warned last month that fourth-quarter revenue would be lower than forecast, could have implications for the broader technology sector. Jet makers Bombardier and Airbus and farm equipment maker Deere & Co will be the latest industrial giants to report earnings amid global trade tensions.

Other companies scheduled to report earnings are Cisco, AIG, Credit Suisse, Nissan and Michelin.

The earnings line-up also includes hotel groups Hyatt and Hilton; food and beverage giants Coca-Cola, PepsiCo, Kraft Heinz and Nestlé; athletic apparel maker Under Armour; and video game developer Activision Blizzard.

Economic calendar

Investors will get a look at new inflation data at a time when Federal Reserve officials have urged patience as they consider whether to continue raising interest rates.

Key US economic data reports include consumer prices on Wednesday, producer prices and December retail sales on Thursday, and industrial production on Friday. The retail sales report was delayed by the government shutdown.

Wall Street will also hear from several Fed officials, including Cleveland Fed president Loretta Mester and Kansas City Fed president Esther George, who are scheduled to speak at events.

In the UK, GDP and industrial production data will come Monday, followed by retail sales on Friday.



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