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Five Things to Know in World Business Today

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These translations are done via Google Translate

Jan 18, 2019, by Lorcan Roche Kelly


Day 28

Prospects for a resolution to the partial government shutdown seem low as the relationship between President Donald Trump and House Speaker Nancy Pelosi deteriorate further. Trump also cancelled the U.S. delegation’s trip to the World Economic Forum in Davos. A meeting between Senate Majority Leader Mitch McConnell and Vice President Mike Pence yesterday evening made no progress towards resolving the impasse. Analysts expect the shutdown to end by mid-February, warning that if it drags on through March it would cause growth to drop below 2 percent for the quarter.

No move

Political standoffs are in fashion this season, with Brexit talks going nowhere right now. Prime Minister Theresa May is refusing to move on her “red lines” as she tries to reach a compromise with parliamentary opponents. She also cancelled plans to attend Davos. Currency markets are relatively sanguine, with the pound trading close to $1.30 this morning, but bond investors are worried.

Trade rumors


A report from the Wall Street Journal yesterday suggested that White House officials were considering rolling back some tariffs on China in order to help calm financial markets. While the Treasury Department subsequently denied it, stock markets are hoping there’s no smoke without fire, and rose overnight in Asia and are now higher in Europe. Treasury Secretary Steven Mnuchin is in favor of easing tariff pressure, according to the report citing unnamed people close to discussions. China confirmed that Vice Premier Liu He will travel to Washington at the end of the month for a new round of trade talks.

Markets rise

Overnight, the MSCI Asia Pacific Index added 0.7 percent while Japan’s Topix index closed 0.9 percent higher amid hopes on a trade breakthrough. In Europe, the Stoxx 600 Index was 1.2 percent higher by 5:50 a.m. Eastern Time with carmakers among the best performers after Chinese authorities released plans to boost consumption. S&P 500 futures pointed to gain at the open, the 10-year Treasury yield was at 2.766 percent, and gold was lower.

Tesla cuts

Shares in Tesla Inc. tumbled more than 5 percent in early trading this morning after Chief Executive Officer Elon Musk said the “road ahead will be very difficult” in a blogpost which also announced a 7 percent reduction in the full-time workforce. He also said that the company would make a smaller profit in the fourth quarter, and issued a warning about the phasing out of electric-car tax credits at the end of this year.

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