Stocks Drop As Google Halts Supplies To Huawei

Fiona Cincotta
By :  ,  Senior Market Analyst

Global stocks plummeted on Monday, as investors reacted to escalating US – Sino trade tensions. Google halting supplies to Chinese telecoms manufacturer giant Huawei amid a White House ban has intensified risk the off sentiment. 

Tech stocks suffer
Tech stocks are falling sharply, the Nasdaq initially dropped some 1.8% but is now off the lows.  Not being able to supply Huawei one of the world’s largest telecom equipment and consumer electronics manufacturer, will hit the US as well as China. This is not a win win for Trump, US firm’s revenue and jobs, particularly from tech firms will also be put at risk by Trump’s heavy-handed actions. The potential impact on the US economy and the global economy as a whole as the two sides dig their heels in deeper is unnerving investors.

The Nasdaq is down 5% from its high earlier this month. However, the Nasdaq is still up 25% across the year to date.Whilst equities are losing ground, the bottom hasn’t completely fallen out of the market over recent weeks. This tells us that despite the tit for tat moves between the US and China investors are still hopeful of an agreement between the two powers. We expect this to be around the end of June when the two leaders meet at the G20. Until then high levels of volatility will be on the menu as investors jump from headline to headline.

The Nasdaq is trading down 1.5% at the time of writing at7380. It trades below its 50 day sma and 100 sma, although continues to trade above its 200 sma. Support can be seen at 7300, a convincing move below 7300 could open the doors to 7250. On the upside resistance can be seen at 7630 prior to 7850.

Related tags: Wall Street

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