Global Stocks Gain as U.S. Delays Ban Against Huawei
May 21 2019 - 5:55AM
Dow Jones News
By Nathan Allen
European stocks opened higher Tuesday following a broadly
positive session in Asia after the Trump administration said it
would grant temporary exemptions to the export blacklist against
Huawei Technologies.
The Stoxx Europe 600 rose 0.4% in opening trade, with the U.K's
FTSE 100 up 0.5% and Germany's DAX up 0.7%.
In Asia, China's Shanghai Stock Exchange was up 1.2%, while
Korea's Kospi was trading 0.3% higher, though Hong Kong's Hang Seng
dipped 0.5%.
Technology stocks led the gains in Europe, recovering some of
the ground lost yesterday after Germany's Infineon said it would
suspend deliveries to Huawei, sparking a selloff of European chip
makers. Switzerland-listed AMS regained 2.8% this morning after
dropping more than 13% on Monday.
The telecom sector was also in focus after Telecom Italia SpA
stuck to its guidance, despite posting lower first-quarter
earnings, driving its shares up 2%. In the U.S., Federal
Communications Commission Chairman Ajit Pai on Monday said he would
support the proposed $26 billion tie-up between T-Mobile US Inc.
and Sprint Corp, removing one of the main hurdles to the
merger.
Meanwhile, the U.S. Commerce Department overnight said it would
grant 90-day licenses for some companies to continue exporting to
Huawei and its associates, providing some respite after the
crackdown on the Chinese telecom prompted a retreat from U.S.
technology stocks, dragging down major indexes.
The S&P 500 closed 0.7% lower and the Dow Jones Industrial
Average shed 0.3%, while the tech-heavy Nasdaq Composite declined
1.5%.
Last week's order effectively banned technology suppliers from
exporting chips or other sensitive equipment to Huawei without a
license, citing national-security concerns. To comply with the
order, Alphabet's Google said it would restrict Huawei's access to
certain features of its Android operating system, a move it later
said had been put on hold after the Commerce Department delayed the
ban.
Jasper Lawler, head of research at London Capital Group, said
Monday's selloff served as a reality check for the Trump
administration, demonstrating how pervasive Huawei's goods are and
how intertwined the group has become with its counterparts in the
U.S.
"This won't be a one-day event. Huawei is entrenched on so many
parts of the tech sector, this could take days or weeks to
untangle," he said.
Analysts at UBS said the back-and-forth between China and the
U.S. was making it difficult for investors to take a definitive
position.
"Our framework suggests the market is currently trading close to
the midpoint between a full-on trade war scenario and a
full-resolution of the trade dispute."
In the U.S., futures pointed to opening gains of around 0.3% for
the S&P 500, 0.2% for the Dow Jones Industrial Average and 0.4%
for the Nasdaq-100.
The yield on 10-year U.S. Treasurys edged up to 2.409% from
2.405% on Monday. Yields move inversely to prices. German 10-year
government bonds were in negative territory at -0.090%.
In commodities, global benchmark Brent crude oil was down 0.1%
at $71.92 a barrel, while gold ticked down by 0.2%.
The WSJ Dollar Index, which tracks the dollar against a basket
of 16 currencies, was up 0.2%.
(END) Dow Jones Newswires
May 21, 2019 05:40 ET (09:40 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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