U.S. arms manufacturers Boeing and Raytheon are under supply-side pressure despite a seemingly 'favorable' environment for the Aeorospace&Defense sector. Boeing shares are losing more than 4% after Wall Street opened:
- Boeing has abandoned a preliminary agreement to sell 100 737 aircraft to Chinese airlines as part of trade restrictions between the US and China. The planes will be sold to other airlines;
- Raytheon has received a $375 million, 10-year contract from the Federal Aviation Administration (FAA) to modernize the WAAS position management system;
- Last week, the United States agreed to sell nearly $1.09 billion worth of weapons to Taiwan. The United States is already working on another document that could increase its engagement closer to China;
- The deliveries include missile systems from Boeing (Harpoon) and Raytheon (Headwinder). As a result, Boeing has been awarded a $355 million contract, while Raytheon has received $85 million;
- The U.S. is working on a 'land-lease' bill that would allow the leasing of armaments to Taiwan with repayment over a 12-year period proposed by regulators. This would allow Taiwan to access U.S. weapons reserves without a physical U.S. military presence on the island;
- China today imposed still unspecified sanctions on the CEOs of both U.S. companies, Ted Colbert (Boeing) and Gregory Hayes (Raytheon), over missile deliveries. In addition, the Chinese Foreign Ministry has been critical of the Czech regulators' delegation to Taiwan, as Beijing treats the island as an integral part of its own territory.
Raytheon (RTX.US) chart, H4 interval. The stock is in a strong downtrend and has lost nearly 10% since settling below its 200-session average. Raytheon's shares have been under supply-side pressure despite growing arms supply needs among NATO members. The company has not been able to sustain higher valuations above $100 from the first phase of the war in Ukraine. Source: xStation5
Boeing (BA.US) stock chart, H4 interval. The stock has entered a strong downtrend, which was initiated by a slide below the 200-session average (SMA200), which runs at $152. The RSI is slowly entering the oversold zone, although the dire atmosphere on Wall Street may pull the price even lower. Source: xStation5
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