STOCKS
Which US Stocks Could Be Impacted By China? Canada is the U.S.’s largest trading partner and China sits
in second place. With this in mind, combined with the recent decline in the
Chinese stock markets, you must be wondering if any American companies are at
risk in any way. The reality is, today, China is an important market for
companies in the U.S. from iPhones to luxury handbags and more. Does this now
mean that these U.S. companies should expect a negative impact to their
profitability? Until now, analysts have made it clear that they do not expect
the current instability in the market to cause a broader economic crisis. They
are however recommending that investors reduce their risk when it comes to
China. This means both refraining from buying Chinese stocks as well as
investing in any U.S. company which relies heavily on China for the majority of
their revenue. Based on this, the main companies on the S&P 500 index (SPX)
which have the most sales from China include Skyworks Solutions Inc. (SWKS,
-0.84%) at 67%, Yum Brands Inc. (YUM, +1.22%) at 52%, Qualcomm Inc. (QCOM,
+0.16%) at 48%, Avago Technologies Ltd. (AVGO, -2.60%) at 48% and Micron
Technology Inc. (MU, -2.30%) at 40%. Interestingly, it is the technology
companies which are most exposed to the current volatility in China. Added to
this, Yahoo Inc. (YHOO, +1.11%) currently still owns a stake in Alibaba Group
Holding Ltd. (BABA, +1.74%) of 15 percent. Meanwhile, 16 percent of Apple
Inc.’s (AAPL, -1.84%) revenue comes from China. Now there is something to think
about.
INDICES
On Thursday, despite coming off session highs, U.S. stocks
ended the trading day higher. This came as a result of a boost in investor
confidence which was evident in the gains for riskier assets such as
commodities and stocks as well as an increase in bond yields. This was a relief
after the chaos on Wednesday where losses in the main indices were strongly
impacted by the halt in the New York Stock Exchange for 3.5 hours as a result
of a technical problem. At the close of trading, the Dow Jones Industrial Average
(DJIA) rose 0.5%, or 87 points, to 17,602. Also on the upside was the S&P
500 index (SPX) which advanced 0.5%, or 11 points, to 2,057 while the tech
heavy Nasdaq Composite index (COMP) also rose 0.7%, or 34 points, to 4,944.
On Thursday, the U.S. dollar (USD) traded broadly higher.
This increase came despite data which showed that last week, jobless claims in
the U.S. had increased to its highest level since February. According to the
U.S. Department of Labor, for the week ending on the 4th of July, the number of
individuals filing for initial jobless benefits was at 297,000, up 15,000. This
missed analysts’ expectations for a decline of 7,000 to 275,000 last week.
Meanwhile on Wednesday, after the minutes of the Federal Reserve’s June policy
meeting were released, the USD declined. This came after the Fed stated that
before they will raise interest rates, they will need to see more signs of a
strengthening economy in the U.S. The EUR/USD traded at 1.1036, down 0.37%
while the GBP/USD was at 1.5393, up 0.21%. Meanwhile, against the currencies in
Canada, Japan and Switzerland, the greenback traded mixed with USD/CAD down
0.08% at 1.2734, with USD/JPY up 0.57% at 121.39 and with USD/CHF up 0.40% to
trade at 0.9491. Also, the U.S. dollar index was at 96.69, up 0.31%.
COMMODITIES
On Friday, crude oil prices gained slightly in early Asian
trade. This came as investors maintained their focus on the volatility in China
to establish demand cues from the world's top importer. Also, investors are
awaiting the weekly report from Baker Hughes (NYSE:BHI) expected out today on
the current rig count in the U.S. Last week, the company reported that the rigs
in the country rose by 12 to 640. This marked the end of a 29 week streak of weekly
draws. WTI crude oil for delivery in August traded at $52.84 a barrel, up
0.10%, on the NYMEX. Also, on Thursday, Brent crude oil for delivery in August
traded at $58.66, up 2.84%, or $1.62, on the Intercontinental Exchange (ICE) in
London.
The Daily Market Review brought to you by Billionaire Forex UK in collaboration with STOCK.
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