Business

Growth warning; Huawei hurting; Davos kickoff

Posted January 22, 2019 5:28 a.m. EST

— 1. Global growth warning: The International Monetary Fund has released its latest economic outlook with a warning: Growth is slowing and things could get much worse if countries keep fighting over trade.

The IMF lowered estimates for growth in 2019 by 0.2 percentage points to 3.5%. It's the second time the agency has cut its forecast for this year.

The biggest risks are the unresolved trade war between the United States and China, and the possibility of the United Kingdom exiting the European Union without a divorce deal.

A big part of the slowdown can be pinned on the world's second-largest economy. China's gross domestic product expanded 6.6% in 2018, according to figures published Monday, the slowest pace of growth since 1990.

Companies are feeling the pinch. Apple (AAPL) warned recently that revenues would take a hit because of a slump in China sales. Ford (F) and Starbucks (SBUX) could report similar pain when they release earnings this week.

2. Markets sink: The gloomy economic news weighed on markets in Asia and Europe, with major indexes in both regions slipping lower on Tuesday.

Investors will be keeping an eye on the reaction in US markets, which were closed for a holiday on Monday, to the IMF warning and China's economic troubles.

"The latest report from the IMF confirming the markets' fears over slowing global growth gave traders few reasons to cheer," analysts at London Capital Group said in a note.

US stock futures edged lower, while European markets opened with marginal losses.

Markets in Asia closed lower, with China's Shanghai Composite index falling 1.2%.

3. Huawei hurting: The US Justice Department is expected to formally request the extradition of Huawei CFO Meng Wangzhou, the Canadian government said Monday. The move could further escalate the geopolitical tussle between the United States and China and complicate efforts to end their trade war.

"I have been told they [the US government] will proceed," David MacNaughton, Canada's Ambassador to the United States, told CNN on Monday. "We have had no indication that they will not."

Meng, the daughter of Huawei's founder, was arrested in Vancouver last month by Canadian authorities acting on behalf of the United States. The US government alleges that Meng helped Huawei dodge US sanctions on Iran.

Meng and Huawei have denied any wrongdoing.

Huawei deputy chairman Ken Hu said the trade war was hurting the company.

"As the technology industry, we rely heavily on the global supply chain and the global innovation ecosystem, so we are probably suffering the most right now," he said during a panel discussion in Davos, Switzerland.

4. Davos kicks off: It's the first full day of the annual gathering of the global elite at the World Economic Forum in Davos. This year's event has been marked by some notable absentees.

President Donald Trump canceled his visit to the Swiss mountain resort, as did UK Prime Minister Theresa May and French President Emmanuel Macron. All three leaders are battling political crises at home.

China's President Xi Jinping and Indian Prime Minister Narendra Modi will also skip this year's gathering.

World leaders that are attending include Japan's Shinzo Abe and Brazilian President Jair Bolsonaro, who is scheduled to address the forum on Tuesday. He told reporters Monday that he wanted to present Brazil as "a country that is safe for investment."

5. Google fined in France: Google (GOOGL) was slapped with a €50 million ($57 million) fine by French authorities on Monday for violating Europe's GDPR data protection law.

The tech giant showed "lack of transparency, inadequate information and lack of valid consent" from users while showing them personalized ads, France's National Data Protection Commission said in a statement.

The fine, though relatively small, is the third Google has faced in Europe in recent years. The company has been ordered to pay more than $7 billion by EU authorities in the past two years for breaching antitrust laws.

6. Coming this week:

Tuesday — World Economic Forum begins; Wynn Resorts (WYNN), Johnson & Johnson (JNJ), Travelers (TRV), IBM (IBM) and Capital One (COF) earnings

Wednesday — Bank of Japan rate decision; Comcast (CMCSA), Procter & Gamble (PG) and Ford earnings

Thursday — ECB rate decision; Southwest Airlines (LUV), American Airlines (AAL), Starbucks and Intel (INTC) earnings

Friday — Colgate-Palmolive (CL) and Royal Caribbean Cruises (RCL) earnings