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Limited Trade Deal Takes Out Major Hurdles for Apple Stocks

Limited Trade Deal Takes Out Major Hurdles for Apple Stocks

SAN FRANCISCO, Calif. – Recent headlines on trade deal boosted the market at the end of the trading week, and it’s removed some of the key hurdles for Apple stocks and others in the tech sector as well.

The US and China have been imposing tariffs on each other’s imports since last year, starting the trade war that has caused up and down sentiments for the global stock market for almost 17 months now. However, on Thursday, the two largest economies in the world agreed, on principle, on phase one to the trade agreement.

The increased optimism on trade talks along with Washington lifting the impending stocks scheduled on Sunday allowed the global stocks to reach new highs and Apple shares to surge in 2019 to new record highs as well.

On Friday, the US government announced that, in line with the trade agreement with China, they are going to lift the new 15% tariffs in Chinese imports, valuing at around $160 billion. The US government also offered to cut the existing tariffs by 50%.

On the other hand, China has agreed to increase its imports from the US, particularly in agricultural, pharmaceutical, and energy products. However, the Chinese government offered no additional details on how much additional US goods they agreed to buy.

If the partial trade deal will be finalized and signed, it will give so much relief to Apple along with other tech companies in the US which have been ultra-sensitive to trade talks, and has most of their components made in China.

According to Dan Ives, an analyst at Wedbush, Wall Street had its focus on the December 15 tariffs. And with the recent optimism on trade, it suggests a green light for stocks in the technology sector heading into 2020, especially since the $160 tariffs have been lifted, removing anxiousness in the market near term.

Ives has also estimated the supposed tariffs on Sunday, which would cause around 4% decline, cutting about 50 cents on Apple’s earnings for 2020 per stocks.

Although even with the uncertainty on trade between the US and China, Apple has already recorded a 70% increase for 2019. Most of the boost on Apple stocks this year followed the broad confidence of investors in recent months that the US and China would reach a trade agreement before the year ends.

Meanwhile, the confidence that the trade war will end has been good for the US stocks this week, with the S&P 500 index reaching a 26% advance this year, boosted by the 44% increase in the information technology sub-index.

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