Market News & Analysis

Top Story

Tech stocks still having a great trade war, for now

Though a Nasdaq crunch approaches in coming days

Technology remains at the heart of a U.S.-China dispute that is rooted in disagreements on trade but also intellectual property and more. Over the last few months, aside from steadily ratcheting up duties on goods produced in China and sold in the U.S., Washington has moved closer to an outright ban on supplying Huawei and added several other Chinese firms to an entity list. In recent days, the U.S. moved to blacklist more Chinese tech groups. Whilst Beijing has appeared more hesitant to levy specific measures against U.S. firms, these can’t be ruled out, leaving giant groups like Apple, Intel, NVIDIA – the manufacturer of specialist processors – and others, potentially in the firing line.

There is therefore a lot riding on substantive trade talks scheduled for the end of the week in Washington. Markets give every indication that expectations are low. So even if the only outcome is a very limited communique—for instance a pledge to hold off/suspend further retaliation pending more talks—market reaction ought to be positive. The obverse could yet upend sentiment further. Even after falling some 5% since late-July, the tech-focused Nasdaq 100 still leads U.S. indices with a 21% gain this year. That compares with second-best performer, the S&P 500 which has risen 16%. The NDX won’t sidestep further volatility if even limited trade-talk hopes are dashed.

NDX’s key trends remain broadly supportive, though some over-lying caution has crept back in since late last month, reflected by the market’s drop below its 21-day exponential average. The index continues to largely climb atop its 200-day average, which is now reinforced by the rising trend line off June lows. The best-fitting overhead counterpart of the rising trend draws an apex that is almost coincident with the week’s upcoming risk events. Nasdaq will thereby have an opportunity to mark the outcome of talks as constructive, or not, in the very near term.

US Tech 100 CFD – Daily [09/10/2019 17:33:19]

Source: City Index

Join our live webinars for the latest analysis and trading ideas. Register now

From time to time, GAIN Capital Limited’s (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.