Here are the winners and losers from rising U.S. trade risks: Wall Street | Wilnesh News
Tensions are rising between the United States and its major trading partners. Bloomberg reported on Wednesday that the Biden administration is considering a broad rule to crack down on companies that export critical chipmaking equipment to China. This comes after the Biden administration announced new tariffs in May on $18 billion worth of Chinese imports, including electric vehicles, solar products, steel and aluminum. Former President Trump said in an interview published on Tuesday that Taiwan should pay the United States for defense costs and claimed that Taiwan accounted for “about 100%” of the United States’ semiconductor business. Trump also promised that if elected, he would impose a 10% tariff on all U.S. imported goods and more than 60% tariffs on Chinese imports. Markets are increasingly betting on a Trump presidency after an assassination attempt on the former president over the weekend, raising the question of what that would mean for investors. China-U.S. Risks JP Morgan Chase said that if tensions between China and the United States escalate, China’s utility industry may be a “winner.” The report noted that during the three periods between 2018 and 2020 when U.S.-China trade tensions escalated, faced off, and escalated again, the MXCN Utilities Index outperformed the broader MXCN Index—an average outperformance of 12.8%. J.P. Morgan’s top picks in this sector include: Hong Kong and China Gas, Electric Power Holdings and Huaneng Power. They are all listed in Hong Kong. The bank also noted that Republicans have pledged to “bring critical supply chains back to the United States to ensure national security and economic stability” and “strengthen Buy American and Hire American policies.” The agency said in a July 17 report that this could have a negative impact on Chinese technology exporters. Goldman Sachs said in a July 17 report that Europe’s “top priority” was that Europe’s gross domestic product and its companies’ earnings could be hit by tariffs. Goldman Sachs analysts wrote: “The prediction market currently believes that the probability of Trump’s re-election is very high (about 70%). For Europe, the biggest concern is tariffs.” Goldman Sachs economists estimate that Trump’s 10% tariffs will If implemented, the Eurozone’s gross domestic product (GDP) will decrease by 1 percentage point. Goldman Sachs said a one-percentage-point decline in sales-weighted GDP would lead to a 10% drop in earnings per share in European stocks. Overall, the total hit to European earnings per share will be about six to seven percentage points, the bank said. “If the full impact occurs in 2025, it would be enough to wipe out any growth that year (our current top-down forecast is 4%),” Goldman Sachs wrote. The bank also looked to history as a guide, saying emerging markets are coping with 2018. The worst performance was in imposing tariffs in 2019 and 2019. Goldman Sachs said that within Europe, Germany was more affected than France. Within the industry, the bank said the beneficiaries of rising trade risks tend to be utilities, healthcare and defensive stocks such as European granola stocks. Goldman Sachs coined the term “GRANOLAS” to refer to the continent’s largest companies by market capitalization: GlaxoSmithKline, Roche, ASML, Nestlé, Novartis, Novo Nordisk, L’Oréal, LVMH, AstraZeneca, SAP and Sanofi. Goldman Sachs said cyclical stocks such as autos, industrials and financials tend to be negatively correlated with trade uncertainty. Overall, Goldman likes a basket of stocks that includes European companies with operations in the U.S. rather than exporters if Trump is re-elected. The report pointed out that in recent years, a large part of Europe’s manufacturing production has been transferred to the United States. The components of this basket include: Air Liquide, British American Tobacco, Dassault Systèmes, GlaxoSmithKline, Novo Nordisk, Roche, Stellantis, InterContinental Hotels wait. Louis Navellier, chairman and founder of Navellier &, said global chip stocks fell sharply on Wednesday, with ASML, Nvidia and TSMC all falling following reports that the United States may tighten trade restrictions. Associates. “Today’s correction in tech stocks appears to indicate that earnings growth rates for large tech companies, which have a large impact on overall market earnings, are expected to slow,” he wrote in a note Wednesday. But he said big tech’s earnings growth rate is expected to slow. “Meaningful selling” will result in other companies being “pushed down as collateral damage.” “These will be buying opportunities. If the artificial intelligence story unfolds as expected, the sharp sell-off in the giant tech companies will also create buying opportunities for these companies,” he wrote. —CNBC’s Michael Bloom contributed to this report.
