Trade war's losers could include microchips, energy, banks

ABC News | 8/18/2019 | Staff
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Looking across the stock market, it's hard to find a company that isn't vulnerable in some degree to the U.S.-China trade war.

Stocks of companies that do lots of business with China, such as chipmakers and other technology companies, are obvious candidates for investors to sell when trade worries rise. They have fallen more than the rest of the market whenever President Donald Trump sends out a tweet or speaks about tariffs.

Investors - Effects - Stocks - Trade - War

But investors are also looking beyond these first-order effects as they pick out which stocks look susceptible to the trade war. Those picks now include many companies that have no significant ties to China but are still at risk.

That's why all but 2% of the stocks in the S&P 500 fell on Aug. 5, when worries ratcheted higher after China let its currency devalue to its lowest level in a decade.

Damage - Trump - Investors - Aug - Tariffs

The damage has been widespread since Trump shocked investors on Aug. 1 by saying he planned soon to extend tariffs across virtually all Chinese imports.

The latest tariffs cover about $300 million of Chinese goods, many of them consumer products that were exempt from early rounds of taxes. Even though Trump has delayed some of the tariffs, they will ultimately raise costs for U.S. companies bringing goods in from China. Those companies will then have to either pass higher prices on to their customers or give up some of their profits. That's a big deal for investors because a stock's price tends to track the path of its earnings over the long term.

Concern - Uncertainty - Trade - Businesses - Shoppers

One concern is that all the uncertainty on trade will lead businesses and shoppers to hold off on spending in hopes of waiting out the tumult. Businesses say they have seen inklings of such behavior, which, if it accelerates, could lead to a self-fulfilling cycle where weaker sales for...
(Excerpt) Read more at: ABC News
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