Nice Overview from Marc Chandler
Overview: Encouraged by the election results, investors bid up Indian and Australian currencies and equities. Japan offered a pleasant surprise by reporting the world’s third-largest economy expanded in Q1. Most other equity markets in Asia fell, and European stocks have the week with small losses. The US decision to isolate Huawei sent ripples through the suppliers and customers. OPEC+ indicated supplies may remain tight and oil prices opened firmer and are seeing early gains of 1% pared. Global benchmark 10-year yields are higher. Core yields are around two basis points firmer, while the periphery is lagging, and Italian bonds are bucking the move. The US dollar is trading heavily against most of the major and emerging market currencies. The yuan posted small gains. Sterling is trying to end its record-long 10-day slide against the euro.
Stocks of Interest
It’s a rough start to the week for chipmakers as key semiconductor manufacturers cut off supplies to Huawei after the Trump administration added the Chinese company to a trade blacklist last week. Premarket movement: Qualcomm (NASDAQ:QCOM) -3.1%, Intel (NASDAQ:INTC) -1.8%; Xilinx (NASDAQ:XLNX) -2.7%, STMicroelectronics (NYSE:STM) -7.4%, Micron (NASDAQ:MU) -3.7%. Google started the trade suspensions over the weekend, leaving Huawei with access only to the open-source version of Android. Nokia (NYSE:NOK), which usually benefits from the Chinese firm’s woes, is up 4.1% premarket, while Ericsson (NASDAQ:ERIC) shares are 1.6% higher.
Oil is higher after Trump threatened “the official end of Iran.” and OPEC+ seen keeping output cut plans so Crude futures climbed as high as 1.7% to $63.96/bbl overnight
- Barron’s said Apple (APPL), Cisco Systems (CSCO), Qualcomm (QCOM), Honeywell International (HON) and Eaton (ETN) are most at risk to the ongoing tit-for-tat with China, citing a Barclays equity strategist who looked at foreign sales as well as import and export levels. Retailers and their suppliers like VF (VF) and Nike (NKE) are also high on the list. Bank of America Merrill Lynch strategists forecast a pullback of 5% to 10% in the S&P 500 related to the latest round of tariffs, and a 20% to 30% hit if the White House imposes tariffs on the rest of Chinese goods.
Don’t Forget This Chart
Means higher likelihood of XLK, AMZN and other “FAANMG” stocks heading lower as SPX works its way toward next gap fill candidate: $2784 to 2743 before major MAJOR support of $2718.
Good luck today!!
Samantha
