Stocks mixed on trade concerns; USD moving higher

Summary:

• Trade concerns see stocks pause

• Apple and Tesla decline on negative news from China

• DE30 lower after bright start

• Pound comes back under pressure

• Norway will revoke electricity subsidies for crypto miners

Following an impressive start to the week, US indices have come back under some pressure today with the US500 dipping back down to the 2655 level. Everything had been looking good for the bulls until right around the time of last night’s closing bell when Trump decided to offer his latest views on the trade spat with China. The US president stated that it is “highly unlikely” that he would accept an offer to avert his plans to raise tariffs on more than $200B Chinese goods to 25% at the start of next year. The markets have recovered a little throughout the session and trade little changed on the European close.

During Trump’s comments last night he singled out Apple products as likely facing tariffs in a move that saw a steady day of gains erased in moments after the closing bell. Trump said that he might impose a 10% tariff on iPhones and computers which would come as a big blow for the tech giant that has endured a large fall in it’s stock price in the past month. Some numbers crunched by investment bank Baird suggest people may not be so willing to pay an extra $120 for the privilege to own the latest iPhone. After all, iPhone prices have already crept to the $1,000 level and scared off many from upgrading or getting into the Apple ecosystem. Shares in the firm opened lower by around 1.5% but have pared the losses a little throughout the session.  

Another stock in the news is Tesla with the automaker stating the sales in China crashed by 70% in October amid the ongoing trade war. The electric-car maker sold just 211 vehicles in the world's largest auto market in October, down 70% from a year ago, according to Reuters, citing an official from China Passenger Car Association. The stock opened lower and remains down by a little over 1.5%.  

The DE30 had begun brightly this morning but this optimism has since faded and the market is lower by around 0.6% by the cash close. Fresenius Medical (FME.DE) is one of the best performing DAX stocks on Tuesday morning. The company was upgraded at Bankhaus Lampe from “hold’ to “buy”. The one-year price target was set at €82. The Bank said that market overreacted guidance revision in October creating a potential investment opportunity. Moreover, Bank’s analyst sees positive impact of NxStage acquisition.

The been a broad decline in sterling today with the pound falling against all of its major peers as traders turn more negative on the currency. The largest declines can be seen against the Antipodean currencies while the GBP/USD rate has dropped back below the $1.28 mark for the first time since the EU announced last week that they would support PM May’s deal. Comments from US President Trump last night that downplayed the chances of a US-UK trade deal after Brexit have no doubt not helped the pound’s plight, but the drop is more likely due to remarks from former May Loyalist Sir Michael Fallon who claims the PM’s deal is doomed, which raises concerns further about her ability to get it through parliament.

The cryptocurrency market drew a lot of attention in several past days as it saw massive downward pressure which pushed the Bitcoin price to the lowest since September 2017. We have not seen any corrective moves to the upside since then suggesting that bears could prevail in the nearest future. We think that at this stage a differentiation between Bitcoin itself (and other cryptocurrencies as well) and blockchain technology deserves more attention as it could matter in the future.