Global Stocks Gain as U.S. Delays Ban Against Huawei
21 Maggio 2019 - 01:38PM
Dow Jones News
By Nathan Allen
European stocks climbed on Tuesday following a broadly positive
session in Asia after the Trump administration said it would grant
temporary exemptions to the export blacklist against Huawei
Technologies.
In the U.S., futures pointed to opening gains of around 0.6% for
the S&P 500, 0.5% for the Dow Jones Industrial Average and 0.8%
for the Nasdaq-100.
The Stoxx Europe 600 rose 0.6% in midday trade, with the U.K's
FTSE 100 up 0.7% and Germany's DAX up 1%.
In Asia, China's Shanghai Stock Exchange was up 1.2%, while
Korea's Kospi was trading 0.3% higher, though Hong Kong's Hang Seng
dipped 0.5%.
Technology stocks led the gains in Europe, recovering some of
the ground lost yesterday after Germany's Infineon said it would
suspend deliveries to Huawei, sparking a selloff of European chip
makers. Switzerland-listed AMS regained 4% this morning after
dropping more than 13% on Monday.
The telecom sector also was in focus after Telecom Italia SpA
stuck to its guidance, despite posting lower first-quarter
earnings, driving its shares up 2%. In the U.S., Federal
Communications Commission Chairman Ajit Pai on Monday said he would
support the proposed $26 billion tie-up between T-Mobile US and
Sprint, removing one of the main hurdles to the merger. Sprint
shares were down 1.8% in premarket trade on Tuesday after having
jumped nearly 19% on Monday.
Meanwhile, the U.S. Commerce Department overnight said it would
grant 90-day licenses for some companies to continue exporting to
Huawei and its associates, providing some respite after the
crackdown on the Chinese telecom prompted a retreat from U.S.
technology stocks, dragging down major indexes.
Last week's order effectively banned technology suppliers from
exporting chips or other sensitive equipment to Huawei without a
license, citing national-security concerns. To comply with the
order, Alphabet's Google said it would restrict Huawei's access to
certain features of its Android operating system, a move it later
said had been put on hold after the Commerce Department delayed the
ban.
Jasper Lawler, head of research at London Capital Group, said
Monday's selloff served as a reality check for the Trump
administration, demonstrating how pervasive Huawei's goods are and
how intertwined the group has become with its counterparts in the
U.S.
"This won't be a one-day event. Huawei is entrenched on so many
parts of the tech sector, this could take days or weeks to
untangle," he said.
As tensions between the U.S. and China have ratcheted up in the
past weeks, analysts have raised fresh concerns about the long-term
outlook for the global economy. The Organization for Economic
Cooperation and Development warned in a report on Tuesday that
uncertainty over trade has derailed global growth over the past
year and threatens to dampen future economic expansion.
The Paris-based research organization cut its forecast for 2019
global GDP growth to 3.2% from 3.3% and urged governments to
resolve the current disputes or risk further disruption.
Analysts at UBS said the back-and-forth between China and the
U.S. was making it difficult for investors to take a definitive
position.
"Our framework suggests the market is currently trading close to
the midpoint between a full-on trade war scenario and a
full-resolution of the trade dispute."
In the U.K., the British pound sank to a four-month low against
the U.S. dollar, amid renewed concerns about Brexit ahead of the
European elections and a general strengthening of the dollar.
"With PM May's tenure heading into the final stretch it appears
unlikely that a last-ditch attempt to get her withdrawal agreement
through parliament next month will be successful," XTB's chief
market analyst David Cheetham said.
The WSJ Dollar Index, which tracks the dollar against a basket
of 16 currencies, was up 0.2%.
The yield on 10-year U.S. Treasurys rose to 2.422% from 2.405%
on Monday. Yields move inversely to prices. German 10-year
government bonds were in negative territory at -0.077%.
In commodities, global benchmark Brent crude oil was up 0.5% at
$72.32 a barrel, while gold ticked down by 0.1%.
(END) Dow Jones Newswires
May 21, 2019 07:23 ET (11:23 GMT)
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