Overseas Headlines- January 8, 2019

Date: January 8, 2019 

United States:

U.S.-China Talks Near Close With Positive Signs From Both Sides

Chinese authorities planned to give a statement following the latest round of U.S. trade talks on Tuesday in Beijing, after both sides signaled progress toward resolving a conflict that has roiled markets. “The talks are still underway and I believe we will release a detailed readout after they are concluded,” Chinese foreign ministry spokesman Lu Kang told reporters at a regular briefing Tuesday in Beijing. No timing was given and it wasn’t immediately clear if the U.S. would release a statement. U.S. Commerce Secretary Wilbur Ross expressed optimism on Monday, telling CNBC that “there’s a very good chance that we’ll get a reasonable settlement.” Vice Premier Liu He made an appearance at the talks on Monday in a sign the Chinese were also pushing for a positive outcome. Liu, the chief economic adviser to Chinese President Xi Jinping, made brief remarks at the negotiations, a person familiar with the meeting said. Asked about his presence on Tuesday, Lu from the foreign ministry said it wasn’t surprising for Liu to be there. Liu led a previous round of talks in Washington last year that ended in failure, and he’s expected to meet chief U.S. negotiator Robert Lighthizer later this month.



Euro-Area Economic Sentiment Sees Worst Losing Streak in Decade

Euro-area economic confidence slid for a 12th month in December, marking the worst streak since the depths of the financial crisis as trade headwinds and the risk of a German recession cast a cloud over the region’s outlook. The European Commission’s economic sentiment index — which covers the mood among both households and companies — dropped more than analysts predicted, to its lowest level in almost two years. The decline was broad-based across industry groups and countries. Economic momentum in the 19-nation euro area weakened persistently through 2018. U.S.-led protectionist policies damped exports, and the risk of a hard Brexit and political uncertainty in some countries including Italy weighed on activity. The outlook received a further damper on Tuesday after a slump in German industrial production suggested Europe’s largest economy may have fallen into a technical recession. The news come after the European Central Bank decided last month that it will no longer add stimulus after nearly four years of buying bonds across the region, urging governments to step up reforms to boost growth. The Commission said sentiment weakened in all of the five largest euro-area economies, with Spain recording the largest drop. Managers were more pessimistic on euro-area production expectations and order books in the industry, future demand in services and employment prospects in construction.



Flows to India Stock Funds Smallest in 23 Months as Demand Cools

Flows into Indian equity mutual funds in December were the smallest in almost two years as increased market volatility and political uncertainty cooled demand for riskier assets. Stock funds took in a net 66.1 billion rupees ($941 million), the least since February 2017, and a 21 percent drop over the previous month, data from the Association of Mutual Funds in India show. Investors globally were roiled at the year-end as renewed trade tensions and the Federal Reserve’s pledge to continue paring stimulus added to uncertainty in Indian markets already digesting losses suffered by Prime Minister Narendra Modi’s ruling party in key states. While funds still took in money, the stickiness of the flows will be tested as political uncertainty grips savers with general elections to be held by May. “Considering the volatility we saw, mutual fund inflows are showing reasonable resilience to the vagaries of the market,” N. S. Venkatesh, chief executive officer at AMFI, said in a conference call. “The political scenario is unfolding and people are cautious.” Retail accounts in mutual funds surpassed 80 million for the first time, a 21 percent jump over December 2017, Venkatesh said. About three-quarters of them are in stock plans, industry data show.