US-China trade talks; VW warns over tariffs; Barclays and Brexit

Posted February 21, 2019 5:36 a.m. EST

— 1. Trade talks: US stock futures were pointing higher ahead of more trade talks between the United States and China.

Top negotiators from the two countries are set to meet on Thursday in Washington, where they'll try to close gaps on issues including China's currency and market access for US companies.

President Donald Trump has indicated that he is prepared to extend his self-imposed deadline if an agreement is close. If he doesn't, tariffs on $250 billion worth of Chinese goods will go from 10% to 25% on March 2.

2. Another trade threat: Volkswagen CEO Herbert Diess has warned about damage to his company from potential US tariffs on imported cars.

Diess told the Financial Times that he agreed with an analyst estimate that import tariffs would cost Volkswagen €2.5 billion ($2.8 billion) a year.

"In the worst-case situation, that would probably be close to the real figure," Diess said of the Evercore ISI estimate quoted by the Financial Times.

On Sunday, Trump was given the results of an investigation into whether imports of cars and car parts threaten US national security. He has 90 days to act on the report's findings.

He could decide to impose tariffs of up to 25% on imports of vehicles, which experts warn would be highly damaging to companies in Europe and elsewhere.

"It's becoming tense once again," Diess told the newspaper. "You know it's a pity because we can't solve it from the car industry [alone]. It's more of a tariffs negotiation between Europe and the United States."

3. Barclays earnings: Shares in Barclays jumped 3.6% after the UK bank reported earnings that matched analyst expectations and highlighted a strong performance from its trading business.

The company also said that uncertainty surrounding Brexit had caused it to aside £150 million ($196 million) in the fourth quarter to cover potential costs.

4. Trouble at Maersk: Shares in shipping giant Maersk dropped nearly 10% after the company warned that its earnings for 2019 would not meet analyst expectations.

Investors have been watching to see how the Danish company would be affected by the global economic slowdown and trade war between the United States and China.

The company issued warnings over both issues in an annual report published Thursday. It also cited the risk from Brexit negotiations.

"The main risk to global container demand relates to a further cyclical slowing of the global economy," the company said.

5. Global market overview: European markets opened mixed, following the trend set in Asia.

The Dow Jones industrial average closed up 0.2% on Wednesday. The S&P 500 added 0.2%, and the Nasdaq was little changed.

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6. Earnings and economics: Domino's Pizza, Hormel Foods and Wendy's will release earnings before the open., Caesars Entertainment, Hewlett Packard Enterprise, RE/MAX Holdings, Roku and are set to release earnings after the close.

The report on existing US home sales for January will be released at 10 a.m. ET.

Shares in Lenovo jumped nearly 12% in Hong Kong after the Chinese tech company beat earnings expectations. Its smartphone business turned a profit for the first time since it acquired Motorola's mobile phone division five years ago.

7. Coming this week:Thursday — Deutsche Telekom, Barclays, Baidu, Domino's, and Wendy's report earningsFriday — Berkshire Hathaway earnings