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US-China trade talks; Xiaomi shares plunge; Fed minutes

1. Trade talks conclude: The current round of trade talks between the United States and Chi...

Posted: Jan 9, 2019 12:07 PM
Updated: Jan 9, 2019 12:07 PM

1. Trade talks conclude: The current round of trade talks between the United States and China have concluded in Beijing, according to China's Foreign Ministry.

It was the first round of face-to-face meetings between American and Chinese officials since President Donald Trump and his Chinese counterpart, Xi Jinping, called a truce in the trade war.

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On Tuesday, it was announced the talks would be extended for a third day, a decision that was interpreted as a sign that discussions were moving in a positive direction.

The extension boosted shares in US companies that do a lot of business in China including Boeing (BA), Caterpillar (CAT) and Apple (AAPL).

The key question is whether a deal can be achieved before March 1, when Trump has threatened to impose another round of tariffs and to raise duties on imports to 25% from 10%.

2. Xiaomi plunge: Shares in Xiaomi dropped 7% in Hong Kong to reach a record low. The Chinese smartphone maker is now trading 40% below its IPO price.

Wednesday was the first day that some investors were able to unload shares following the company's stock market debut in July.

The wave of selling was met with a promise from Xiaomi's chief executive and chief financial officer to not sell their shares for at least another year.

They said in a statement that the decision was made "for the purpose of expressing their confidence in the long term value of the company."

Xiaomi's stock suffered some collateral damage after its rival Apple warned last week that iPhone sales in China would be lower than expected.

3. Fed minutes: The US Federal Reserve will release minutes from its December meeting on Wednesday.

The Fed raised interest rates for the fourth time in 2018 at the meeting, but signaled a more patient approach to raising rates this year. The minutes will give investors insight into the debate that led to the decision.

The rate hikes have sparked a backlash from Trump and contributed to investor fears that the central bank is ending the era of easy money too quickly.

Since the meeting, Chairman Jerome Powell has said the Fed is "always prepared" to shift the stance of policy if needed. He stressed that he would not resign if pressured to do so by Trump.

4. Global market overview: US stock futures were pointing higher, suggesting that Wall Street could be headed for another day of gains.

European markets opened higher following a positive trading session in Asia.

The Nasdaq and Dow extended winning streaks on Tuesday by posting gains of 1.1%. The S&P 500 added 1%.

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5. Earnings and economics: Bed Bath & Beyond (BBBY) and WD-40 (WDFC) will release earnings after the close.

The US Energy Information Administration will release data on crude inventories.

US oil prices were trading 1% higher at just above $50 per barrel. Crude has advanced for eight sessions in a row, its longest win streak since July 2017.

German foreign trade fell on a monthly basis in November, according to government data. It's more evidence that the global trade conflict between the United States and China is taking a toll.

6. Coming this week:
Wednesday — KB Home (KBH) and Bed Bath & Beyond (BBBY) earnings; Fed minutes; Crude inventories
Thursday — Federal Reserve Chairman Jerome Powell speaks at the Economic Club in Washington, DC; Sears returns to bankruptcy court to potentially get a decision that could determine its future
Friday — CPI reports

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