US-China Tensions Could Put Pressure on Technology Industries
Souring relations between the US and China could have the greatest impact on technology sector stocks. The technology sector is in a place of particular weakness due to its substantial supply chain requirements based in China.
However, while the President made clear his condemnation of the actions, he stopped short of further trade restrictions on China. This caused an almost immediate jump in technology stocks, particularly in semiconductors.
According to Paul Christopher, head of global market strategy at Wells Fargo Investment Institute, the President’s actions forestalled a substantial stock decline. Christopher stated:
If he had done something more heavy handed, if he had done something to change the phase one trade deal, that would have been the fear that the market had started pricing in.
Analysts also suggest that posturing by both former Vice President Joe Biden and President Trump during the election could increase tensions. With an election forthcoming, both candidates will want to appear strong.
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