Over the weekend we heard there was news that China and the United States were far apart when it comes to a trade deal. It was originally reported that the Chinese would not send delegates to the U.S. this week for more negotiations. This news sent the Shanghai market sharply lower as it declined by nearly 6% overnight. The U.S. markets also started the session sharply lower at the open but have rallied decently off the lows.
Sectors To Watch
Many different sectors and stocks will come under pressure if there is no trade deal soon. First, the semiconductor stocks are highly tied to a Chinese trade deal. On Monday morning, the VanEck Vectors Semiconductor ETF (NYSE:SMH) traded lower by 2% on the news. Many individual semiconductor stocks such as Micron Technology (NASDAQ:MU), NVIDIA (NASDAQ:NVDA), Skyworks Solutions (NASDAQ:SWKS), Broadcom (NASDAQ:AVGO) and many others also traded sharply lower on Monday.
Caterpillar (NYSE:CAT) is another stock that could be punished if there is no trade deal. Remember, CAT is the leading manufacturer in construction and mining equipment. Apple (NASDAQ:AAPL) is a U.S. tech giant that gets about 18% of its revenue from China, so this stock could be adversely affected on a failed trade deal.
The Gamble
The casino plays could also be vulnerable. Stocks like Wynn Resorts (NASDAQ:WYNN), Las Vegas Sands (NYSE:LVS) and MGM Resorts (NYSE:MGM) are heavily tied to China's Macau market.
Get ready, this trade story between the U.S. and China could just be heating up. While both countries want and need a trade deal, the negotiations seem to have reached a road block. Either way, this news should create solid trading opportunities for traders and investors along the way.
