Five Things You Need to Know to Start Your Day
China’s Xi Jinping hosts an unusual meeting of the country’s top leaders, gloomy news from the IMF and the U.K.’s Labour Party calls for a vote in Parliament that could lead to a second Brexit referendum. Here are some of the things people in markets are talking about.
President Xi Jinping stressed the need to maintain political stability in an unusual meeting of China's top leaders — a fresh sign of the growing concern about the social implications of the country’s slowing economy. "The party is facing sharp and serious dangers of a slackness in spirit, lack of ability, distance from the people, and being passive and corrupt," Xi said, according to Xinhua. While such warnings aren't new, the mention of "serious" threats to the party's "long-standing rule" appeared to be.
The International Monetary Fund cut its forecast for the world economy, predicting it will grow at the weakest pace in three years in 2019 and warning fresh trade tensions would spell further trouble. In its second downgrade in three months, the lender blamed softening demand across Europe and recent palpitations in financial markets. It predicts global growth of 3.5 percent this year, weaker than the 3.7 percent expected in October and the rate in 2018. “The world economy is growing more slowly than expected, and risks are rising,” Managing Director Christine Lagarde told reporters in Davos, Switzerland.
The U.K. Labour Party is calling for a vote in Parliament that could pave the way to a second referendum, raising the possibility that Brexit could be reversed. The main opposition party proposed an amendment to a government motion — due to be debated on Jan. 29 — calling for votes on various ways of avoiding a messy no-deal divorce. One of those options is a second referendum. Meanwhile U.K. Prime Minister Theresa May is refusing to rule out delaying Britain’s departure from the European Union as Parliament moves to take over the process to avoid an economically damaging no-deal Brexit. May is under pressure from a cross-party group of politicians who are drafting a new law that could force her to ask the EU to extend the Brexit deadline. If no deal is struck by Feb. 26, Parliament will be able to direct the next steps, including forcing May to call for an extension to the negotiations beyond Britain’s planned exit date of March 29, under the plan.
Japanese Prime Minister Shinzo Abe and Russian President Vladimir Putin meet in Moscow to discuss the territorial dispute over four islands that's prevented the two countries from signing a World War II peace accord. A Kyodo News report Monday said Abe was ready to sign a peace treaty in return for two islands. Tougher Russian rhetoric leading up to the meeting could be a negotiating tactic, according to a Russian government official and a Japanese diplomat who asked not to be named.
Asian stocks are set for a muted start to trading Tuesday as investors weighed the latest batch of headlines on global growth and trade, without any direction offered from American markets that were shut for a holiday Monday. Futures in the region were little changed after stocks in Europe slipped on Monday. U.S. contracts pointed lower. The dollar was steady and bonds in Europe were mixed. News that the IMF was cutting its global growth forecast to the weakest in three years merely cemented an already downbeat mood. The offshore yuan was steady after President Xi Jinping stressed the need to maintain political stability in an unusual meeting that suggested fresh concerns about the implications of the slowing economy.
What we've been reading
This is what caught our eye over the past 24 hours
IMF, CEOs warn of slowing world economy on eve of Davos summit
The fat cat backlash is coming to Davos
Kamala Harris seeks to make history with 2020 presidential run
Watchmaker Patek Philippe may be coming up for sale
FDA may call back furloughed staff for food-safety checks
Trump’s Russian pop star pal cancels U.S. tour over probes
Hedge fund billionaire Griffin buys $122 million London home
©2019 Bloomberg L.P.