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Michael Haddad
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Nowhere to go. It's hard to be discouraged on a Friday, but the market has tried well. The Dow, which had increased more than 200 points early in the day, closed less than a third, while the Nasdaq ended in the red. At least PayPal and Procter & Gamble have excited investors to jump over 8%. Today After the bell, we …
- … highlight the lack of direction of the market;
- … wonder if the meeting between US President Trump and Chinese President Xi will produce concrete results;
- … and propose some actions that could be hard hit by a trade war.
The trade war will not disappear
The stock market was still looking for direction at the close of trading Friday, with the
S & P 500
finish at 0.04% at 2767.78, and the
Nasdaq Composite
down 0.5% to 7449.03. the
Dow Jones Industrial Average
earned 64.89 points, or 0.3%, at 25,444.34.
Market concerns about trade have recently returned after being inactive for some time. After imposing 10% tariff on 200 billion dollars of Chinese goods in September, President Trump threatened to raise the rate to 25% on 1 January and possibly add another 257 billion dollars to the list. This would cover almost all Chinese imports to the United States.
Although President Trump and Chinese President Xi are planning to meet at the G-20 summit in Buenos Aires next month, it is unclear whether negotiations can be constructive.
The market is trying to digest the trade war, but there are signs that tariffs are starting to affect incomes. And as earnings growth should slow in 2019, tariffs could have an even greater impact on the market, he writes.
Barclays
strategist Maneesh Deshpande in a note on Friday. In the event of a generalized trade war with tariffs of 25% on all trade between the United States and China, the S & P 500 is expected to fall by 3% in 2019, according to Deshpande.
The commercial impact on individual businesses can however vary considerably from one market to the other. Barclays has some recommendations to avoid, or just to avoid for our readers.
Deshpande and his team have selected a basket of 30 stocks likely to be the most affected by the trade war. The selection is based on the industry's import and export data, as well as information provided by stock analysts of the company. Retail stores, for example, have been removed because they do not carry their own brands but mainly sell products from other manufacturers, which are the actual importers. Stocks with an overweight in Barclays analysts were also excluded as they are protected by strong fundamentals and positive catalysts.
According to the strategist, most stocks in the basket are concentrated in the Consumer Discretionary, Information Technology and Industrials sectors.
Ralph Lauren
(RL),
Arconique
(CDNA), and
Mattel
(MAT), would be among the hardest hit, while
Apple
(AAPL) also made the basket.
This basket of equities underperformed the equally weighted S & P 500 when the trade war first warmed up in February, then remained close to scale for a good part of the year. However, these stocks have begun to underperform in recent days, indicating that investors are now taking a more aggressive stance on business risk, Deshpande wrote.
Ignore it at your own risk.
Write to Evie Liu at [email protected]
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