Tuesday 15 October 2019

Markets Report: US trade war saps investor appetite


Stock Image: REUTERS
Stock Image: REUTERS

US stocks dipped yesterday, as reports that Washington could impose sanctions on another Chinese company heightened trade worries, while a slump in Qualcomm shares pressured the technology sector.

The reports came after Washington's decision to temporarily ease curbs on Huawei Technologies calmed investors nerves on Tuesday. There was a hit to technology sector earnings from the Trump administration's decision last week to add the Chinese telecoms equipment maker to a trade blacklist.

However, sentiment soured on reports of likely similar restrictions on Chinese video surveillance firm Hikvision.

"What investors are looking at is the fact that this could be another retaliation," said Kim Forrest, chief investment officer at Bokeh Capital Partners in Pittsburgh.

"The negotiations have been more of a tit for tat than actual conversation."

The daily exchanges between the United States and China have kept investors on edge and knocked the benchmark S&P 500 index 3.5pc off its all-time high hit on May 1.

Qualcomm plunged 10.1pc, contributing the most to a 0.43pc drop in the S&P 500 technology sector. The Philadelphia Semiconductor index slipped 1.57pc.

A federal judge ruled that the chipmaker illegally suppressed competition in the market for smartphone chips by threatening to cut off supplies and extracting excessive licensing fees.

In late morning on the US east coast the Dow Jones Industrial Average was down 97.68 points, or 0.38pc, at 25,779.65.

The S&P 500 was down 10.21 points, or 0.36pc, at 2,854.15 and the Nasdaq Composite was down 25.62 points, or 0.33pc, at 7,760.10.

The communication services index was the only one of the 11 major S&P sectors trading higher, lifted by a 2.9pc gain for Netflix.

European shares edged lower on Wednesday as concerns the US-China trade war could become protracted again worried investors, while a drop in the pound helped London's blue-chip index outperform.

In Dublin, the Iseq was lower, with AIB and Bank of Ireland both down.

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