Market news

(Reuters) – U.S. stock market was set to open roughly flat on Tuesday, stabilizing after a slide a day earlier driven by concerns that the fallout from the U.S.-China trade dispute could be set to dominate the corporate earnings season and weaken profits.

Initial releases in a bumper day of results on Tuesday showed Xerox Corp rising 5.8 percent in premarket trading after beating profit estimates, while Pfizer Inc fell 1.7 percent and Harley-Davidson Inc plunged about 8 percent.

Wall Street sold off on Monday after Caterpillar Inc and Nvidia Corp joined a growing list of companies to blame a slowdown in China for the grim forecasts.

Whirlpool Corp, another major China-linked business, dropped 5.6 percent after the home appliances maker warned of a higher tax bill, costs and a strong dollar hitting its 2019 profit and revenue.

In a potential setback to the progress in U.S-China trade talks, the U.S. Justice Department leveled charges against China’s telecom giant Huawei days before a high-level meeting between the two countries in Washington, aimed to tackle a prolonged tariff war that has roiled financial markets.

Reports this week from high-profile companies including Apple Inc, which has already issued a sales alert due to weak demand from China, and Boeing Co could worsen the fears.

Although earnings have largely surpassed Wall Street’s expectations, helping the S&P 500 climb about 12 percent from its December lows, worries about slowing global growth have tempered expectations.

CARACAS (Reuters) – Venezuelans braced for the deepening of a brutal economic crisis on Tuesday after the United States imposed sanctions sharply curbing the country’s vital oil exports, while the socialist government responded by refusing to load crude cargoes without payment.

The Trump administration hopes the sanctions, which bar state-owned oil company Petroleos de Venezuela from collecting proceeds from crude sales to U.S. refineries, pressure President Nicolas Maduro to step down and allow opposition leader and self-proclaimed president Juan Guaido to call elections.

In a defiant national broadcast on Monday night, Maduro said he would take legal action to challenge the sanctions and defend Citgo Petroleum Corp, PDVSA’s U.S. refining subsidiary, which he accused the United States of trying to steal. He also pledged to retaliate, but did not announce any specific measures.

PDVSA responded to the sanctions by ordering customers with tankers waiting to load crude destined for the United States to prepay, according to three sources with knowledge of the decision. Such prepayment could be in violation of the sanctions, setting the stage for a standoff at the ports.

The loss of revenue from the United States, the No. 1 buyer of Venezuelan crude, was sure to further hamper the government’s ability to import basic goods like food and medicine, exacerbating a humanitarian crisis that has prompted more than 3 million people to flee the hyperinflation-stricken country in recent years.

NEW YORK/SAN FRANCISCO (Reuters) – Federal Reserve Chairman Jerome Powell has a problem: how to explain that the Fed may soon begin to taper its ongoing asset-shedding operation without looking like he’s hunkering down for a coming recession, or caving to U.S. President Donald Trump.

Not long ago, Powell expected to face this delicate communication test some time later in 2019, rather than at his news conference on Wednesday following the close of the Fed’s first policy meeting of the year.

But three things – an unexpected scarcity of reserves deep in the plumbing of Wall Street, overt public pressure from investors and the White House, and the Fed’s own decision to rethink its interest-rate hikes – are forcing the U.S. central bank to acknowledge the real possibility of hanging on to more bonds than originally planned.

A bigger balance sheet could result in an across-the-board easing of market borrowing costs and the foreign-exchange value of the dollar, easing strains on emerging markets. It could also affect the Fed’s appetite for bond buying in the face of a future U.S. downturn.

For more than a year, the Fed has methodically trimmed its multi-trillion-dollar balance sheet – from nearly $4.5 trillion to about $4.1 trillion and falling – without much notice.

Instead, it has kept the world’s eyes trained on a series of interest-rate hikes which, according to careful messaging from policymakers in recent weeks, may have come to an end.

But late last year, prominent investors took to blaming the Fed’s balance sheet runoff for market volatility. To underline what they saw as the harmful restraining effects of the Fed’s reversal of its bond-buying stimulus, the program known as quantitative easing undertaken during the financial crisis to jump-start the economy, they dubbed the runoff “quantitative tightening.”

WASHINGTON/HONG KONG (Reuters) – Huawei’s CFO “should not be a hostage” in Sino-U.S. relations, her lawyer said on Tuesday, after the United States announced criminal charges against herself and the Chinese firm just days before crunch trade talks with Beijing.

The Justice Department charged Huawei Technologies Co Ltd and its chief financial officer with conspiring to violate U.S. sanctions on Iran by doing business through a subsidiary it tried to hide and that was reported on by Reuters in 2012.

In a separate case, the Justice Department charged the telecommunications equipment maker with stealing robotic technology from T-Mobile US Inc. Huawei has said the companies settled their dispute in 2017.

CFO Meng Wanzhou, the daughter of Huawei’s founder, was arrested in Vancouver on Dec. 1, a move which was followed by China arresting two Canadians on national security grounds. She is scheduled in court on Tuesday to discuss her bail terms, and is subject to a U.S. extradition request.

Her lawyer Reid Weingarten, partner at Steptoe & Johnson, pointed to “complex” Sino-U.S. relations.

“Our client, Sabrina Meng, should not be a pawn or a hostage in this relationship. Ms. Meng is an ethical and honorable businesswoman who has never spent a second of her life plotting to violate any U.S. law, including the Iranian sanctions.”

Huawei said it had sought to discuss the charges with U.S. authorities “but the request was rejected without explanation”.

It said it “denies that it or its subsidiary or affiliate have committed any of the asserted violations” and “is not aware of any wrongdoing by Ms. Meng.”

China’s foreign ministry urged the United States drop the arrest warrant and end “unreasonable suppression” of Chinese companies. Spokesman Geng Shuang also said China had issued stern representations to both Canada and the United States after the U.S. formally issued its extradition request for Meng.

Canada’s Justice Minister has 30 days from receipt of the request to decide whether to grant authority to proceed. If granted, Meng’s case would be sent to the British Columbia Supreme Court for a hearing, which could take weeks or months.

The development is likely to upset talks between Beijing and Washington this week as part of negotiations intended to walk back trade tensions between the globe’s two largest economies.

DUBAI (Reuters) – A senior Iranian Revolutionary Guards commander on Monday threatened Israel with destruction if it attacks Iran, state media reported.

The comments by Brigadier General Hossein Salami, deputy head of the elite Islamic Revolutionary Guard Corps, followed an Israeli attack on Iranian targets in Syria last week – the latest in a series of assaults targeting Tehran’s presence there in support of President Bashar al-Assad’s government.

“We announce that if Israel takes any action to wage a war against us, it will definitely lead to its own elimination and the freeing of occupied (Palestinian) territories,” Salami said, quoted by state television.

Iranian officials have previously said Tehran, which does not recognize Israel, would respond swiftly to any Israeli attack.

Israel backed U.S. President Donald Trump’s move to back out of the 2015 international deal on Iran’s nuclear program and welcomed Washington’s reimposition of sanctions on the country.

Israel sees Iran’s nuclear and ballistic missile programs as a threat to its existence. Iran says its nuclear work is for peaceful purposes only.

LONDON (Reuters) – Britain’s government cannot have a “managed no deal” as its policy for leaving the European Union and parliament must be able to extend the negotiating period with the bloc, a committee of British lawmakers said on Monday.

“Having taken a wide range of evidence on the implications of a no deal Brexit, the committee is clear that this cannot be allowed to happen,” Hilary Benn, chairman of parliament’s Brexit committee, said.

“MPs (lawmakers) must be able to vote on extending Article 50 if Parliament cannot reach agreement on a way forward before March 29,” Benn said after the committee published its response to May’s defeat on her Brexit deal by 230 votes in parliament two weeks ago.

WASHINGTON (Reuters) – President Donald Trump expressed skepticism on Sunday that U.S. lawmakers seeking to avoid another government shutdown could reach a deal on border security that he would accept, as he renewed his vow to build a wall on the southern border with Mexico.

In an interview with the Wall Street Journal, Trump said chances were low that Congress could craft an agreement and avoid another closure of part of the U.S. government in three weeks’ time, when funding will expire.

“I personally think it’s less than 50-50, but you have a lot of very good people on that board,” the president said, referring to the committee of lawmakers appointed to work out a compromise on border security funding.

“Does anybody really think I won’t build the WALL? Done more in first two years than any President!” Trump wrote on Twitter on Sunday evening.

But Trump also threatened to resume the shutdown on Feb. 15 if he does not get what he wants.

WASHINGTON (Reuters) – The Trump administration’s $1.5 trillion cut tax package appeared to have no major impact on businesses’ capital investment or hiring plans, according to a survey released a year after the biggest overhaul of the U.S. tax code in more than 30 years.

The National Association of Business Economics’ (NABE) quarterly business conditions poll published on Monday found that while some companies reported accelerating investments because of lower corporate taxes, 84 percent of respondents said they had not changed plans. That compares to 81 percent in the previous survey published in October.

The White House had predicted that the massive fiscal stimulus package, marked by the reduction in the corporate tax rate to 21 percent from 35 percent, would boost business spending and job growth. The tax cuts came into effect in January 2018.

“A large majority of respondents, 84 percent, indicate that one year after its passage, the corporate tax reform has not caused their firms to change hiring or investment plans,” said NABE President Kevin Swift.

The lower tax rates, however, had an impact in the goods producing sector, with 50 percent of respondents from that sector reporting increased investments at their companies, and 20 percent saying they redirected hiring and investments to the United States from abroad.

The NABE survey also suggested a further slowdown in business spending after moderating sharply in the third quarter of 2018. The survey’s measure of capital spending fell in January to its lowest level since July 2017. Expectations for capital spending for the next three months also weakened.

LONDON (Reuters) – World stock markets inched higher on Friday as strong earnings helped to underpin investor sentiment in the face of growing signs that the global economy is slowing and a still unresolved trade dispute between the United States and China.

The euro recovered lost ground against the dollar after falling to its lowest in six weeks following Thursday’s European Central Bank meeting.

European markets opened firmer, with the automakers and tech sector indices rising 1.5 percent and 1 percent respectively. The pan-European STOXX index hit its highest since Dec. 4, up 0.8 percent on the day.

The gains came as stocks rose overnight in Asia and the United States on the back of strong earnings from U.S. tech firms.

MSCI’s All-Country World Index, which tracks shares in 47 countries, was up 0.3 percent on the day. But the gauge was set to break a four-week streak of gains as weak economic data and cautious soundings from central banks pulled the index half a percent down on the week.