Wall Street stumbled with Nvidia as six of the Magnificent 7 were on the red side of the ledger amid reports that China’s Huawei Technologies is developing a new artificial intelligence chip that could replace some of the dominant chipmaker’s products.
That comes as the mega-stocks are in focus for investors, with Amazon, Apple, Meta and Microsoft all set to report their earnings this week.
And while US stock markets started the week on the backfoot, European markets were broadly stronger despite the widespread blackouts across Spain and Portugal, and the UK’s FTSE 100 eked out a small gain to mark its longest winning in more than five years.
Meanwhile, US Treasury secretary Scott Bessent said it’s up to China to de-escalate the tensions between the world’s two biggest economies, and that India will be one of the first cabs off the rank when it comes to cutting a trade deal.
The facts will slowly emerge
“Getting plenty of airplay in the media is data showing a slump in goods being transported from China towards the US, with various indicators showing freight activity and bookings down in the order of 30-50% compared to year-ago levels,” Bank of New Zealand senior markets strategist Jason Wong said in a note. “While we might have passed peak market anxiety regarding the trade war, the economic impact is only just beginning.”
Stocks on Wall Street were led lower by the tech-heavy Nasdaq Composite, which was down 0.6% at 7am in Auckland as declines among the mega-stocks weighed. Nvidia was down 2.4% after the Wall Street Journal reported over the weekend that Huawei is developing a new chip it hopes could replace some of the dominant chipmaker’s products.
Among the Magnificent 7 companies reporting this week, Apple’s result will get particularly attention to gauge the iPhone maker’s reliance on its Chinese supply chain amid the heightened tensions between the US and China.
Chinese policymakers yesterday reiterated plans to support the world’s second biggest economy in the face of US tariffs, and confirmed confidence in hitting the goal of 5% economic growth.
Deep breaths
US Treasury secretary Bessent said many trading partners had put forward very good proposals to avoid the proposed tariffs and that talks with India are going very well. He said he expected India will be one of the first deals to be signed.
Bessent said China’s recent exemptions on some US products showed a willingness to de-escalate, and that it’s up to the Asian nation to keep doing so given it sells five times as much to the US as the North American nation does to it.
Meanwhile, stocks in Europe were stronger, with Germany’s DAX 30 up 0.1% and France’s CAC 40 advancing 0.5%. The UK’s FTSE managed a 0.02% increase, marking its 11th straight winning session in its longest streak since December 2019.
The kiwi dollar was largely unchanged trading at 59.68 US cents at 7am from 59.67 cents yesterday, while Australian futures are pointing to a 0.2% increase for the S&P/ASX 200 index today.
New Zealand’s finance minister Nicola Willis delivered a pre-budget speech this morning outlining the challenges facing the nation’s economy, and said the operating allowance has been reduced in the upcoming budget as the government remains committed to balancing the books.
Reporting by Paul McBeth. Image from Chris Ried on Unsplash.