US open: Stocks head south following Washington's blacklisting of Huawei

By Iain Gilbert

Date: Monday 20 May 2019

US open: Stocks head south following Washington's blacklisting of Huawei

(Sharecast News) - US equities opened lower on Monday, with market participants concerned about the potential repercussions of the White House's crackdown on Chinese telecommunications giant Huawei.
As of 1530 BST, the Dow Jones Industrial Average was down 0.12% at 25,733.16, while the S&P 500 had lost 0.30% to 2,850.86 and the tech-heavy Nasdaq was trading 1.10% weaker to 7,730.62.

The Dow Jones opened XXX points weaker, starting the week lower after sliding 0.7% over the previous week, stretching its weekly losing streak out to four, the index's longest since May 2016.

The Trump administration added Huawei to a trade blacklist last week, leading Google parent company Alphabet to stop some business with the group - including the transfer of hardware, software and key technical services.

As a result, Huawei is no longer able to license Google's proprietary Android operating system and other services and can only use a public version of the operating system via the Android Open Source Project.

Future trade talks between the Beijing and Washington also appeared to be in doubt, with CNBC reporting over the weekend that scheduling for the next round of negotiations was "in flux," as neither side appeared willing to agree to concessions needed to further progress.

The South China Morning Post cited several China-based analysts who argued the Asian superpower had little incentive to engage in further talks until US negotiators showed a willingness to compromise.

While the intensifying trade war between the two biggest economies in the world continued to rattle global financial markets, America's decision to remove tariffs on Canadian and Mexican steel and aluminium was seen as likely to provide some relief.

Elsewhere, Trump warned Iran to stop threatening the US and not to instigate a conflict or it would "end" the Islamic Republic.

As tensions between both countries escalated, on Sunday Trump tweeted: "If Iran wants to fight, that will be the official end of Iran. Never threaten the United States again!"

The US deployed additional warships and planes to the Gulf in recent days as tensions between both sides escalated in the wake of the President's vow to block Iran from developing nuclear weapons.

In corporate news, Boeing was flying 0.49% lower in early trade after European airline Ryanair cited 737 MAX issues as a cause of its own profit warning.

Chipmakers Nvidia, Advanced Micro Devices, Xilinx, Intel, Qualcomm, Broadcom and Micron Technology were all down at the opening bell after the firms were forced to halt the supply of their critical software and hardware components to Huawei.

A greater than 3% drop in shares of Apple added to markets' woes, and Tesla shares crashed 6.12% after analysts at Wedbush slashed their target price on the carmaker.

Shares in Sprint surged 22.67% at the bell after US Federal Communications Commission chairman Ajit Pai said he would recommend approval of its $26.5bn merger with T-Mobile.

In terms of major economic data, factories proved to be a significant drag on economic activity throughout April, as reflected in a sharp pullback in the Chicago Federal Reserve's monthly national activity index.

The Chicago Fed's index came to a negative 0.45 in April, down from a positive 0.05 in March and a negative 0.31 in February.

Elsewhere, Fed chairman Jerome Powell will address the Atlanta Fed's Financial Markets Conference at 1800 BST.


Email this article to a friend

or share it with one of these popular networks:

Top of Page