G20 summit — What to know in markets Friday

·Reporter

Updated Fri, Jun 28, 2019, 1:57 AM

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The highly-anticipated G20 summit kicks off on Friday in Osaka, Japan.

All eyes are on President Donald Trump and President Xi Jinping as the two leaders prepare to meet for extended trade talks over a lunch meeting on Saturday. Ahead of Trump and Xi’s meeting, U.S. Trader Representative Robert Lighthizer and Chinese Vice Premier Liu He are expected to meet, according to the Wall Street Journal. And, President Xi is reportedly planning to attend the meeting with prepared terms for further trade negotiations.

In theory, if the trade discussions play out well at the G20 between Trump and Xi, that would put a pause on the looming tariffs set to go into effect on the remaining $300 billion worth of Chinese goods. However, on Thursday, Trump’s top economic advisor Larry Kudlow said in an interview with Fox News that no official agreements have been made, and the U.S. may green light the remaining tariffs.

Though many agree that the high-stakes meeting will end with at least a temporary truce, there is still skepticism over whether or not it will result in a solid trade deal. “It seems likely that Presidents Trump and Xi will agree to another tariff ceasefire on the sidelines of this weekend’s G20 summit in Osaka, Japan,” Capital Economics wrote in a note Wednesday. “But given the differences between the two sides, we suspect that any truce will prove temporary. The conclusions of the summit itself are likely to be vague, with the group still divided over the way forward on issues like WTO reform, climate change and sustainable investment.”

If the U.S. tariffs are slapped on the remaining Chinese goods, there are several sectors in the market that could be hit especially hard, according to Barclays.

“As for the effect on US corporate profits, the level of international sales is not a good proxy to estimate the effect of tariffs imposed by China on US goods, as what really matters is the level of actual exports and imports,” the firm wrote in a note to clients Wednesday. “We estimate that while the effect on S&P 500 earnings is relatively modest at ~2%, there is substantial variation across sectors, with Consumer Discretionary, Information Technology and Industrials the most affected.”

Meanwhile, beer giant Constellation Brands (STZ) is the only major company to report earnings on Friday. Analysts expect the company to report adjusted earnings of $2.05 per share on $2.07 billion of revenue, according to data compiled by Bloomberg.

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Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.

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