Trade War Becomes Currency War

Here is a daily recap of the S&P 500 broken down by sector followed by sector heat map as the trade war becomes currency war. Stocks in heat map are based on the top 10 holdings of each sector ETF. Click on each picture to zoom in. Below is a summary of today’s action on Wall Street provided by CNBC:

Futures point to Dow opening more than 300 points lower amid US-China trade turmoil

Futures on Sunday evening pointed to a lower open for stocks stateside when they open on Monday. Dow Jones Industrial Average futures dropped 306.00 points, implying an opening decline of 301.01 points on Monday’s open, as of 11:42 p.m. ET Sunday. Futures also pointed to opening declines for the S&P 500 and Nasdaq on Monday.

The S&P 500 (SPY) tanked -2.98% today. All 11 sectors finished in the red. Technology (XLK) -4.17% led the market down. Communication services (XLC) and financials (XLF) each had losses of over 3%. Consumer discretionary (XLY), consumer staples (XLP), energy (XLE), healthcare (XLV) and industrials (XLI) each had losses of over 2%. Materials (XLB), real estate (XLRE) and utilities (XLU) each had losses of more than 1%.

The Dow Jones index sinks -767 points (-2.90%) to close at 25,717. The Nasdaq crashes -278 points (-3.47%) to settle at 7,726.

Trade War Becomes Currency War

Stocks tumbled on Monday, having its worst day of 2019 as China struck back from President Trump’s latest tariffs, devaluing its currency. China, which has historically controlled its currency, the yuan, allowed it to fall to its lowest level on Monday against the dollar in more than a decade. The onshore yuan broke above 7 per U.S. dollar and traded around 7.05.

President Trump took to Twitter, accusing the Chinese of devaluing/manipulating its currency:

Along with the currency move, China retaliated by suspending the purchases of U.S. agricultural products and threatened to slap tariffs on the farm goods purchased after Aug. 3, according to state media and other reports.

Trump announced last week the U.S. would impose a 10% tariff on $300 billion worth of Chinese imports. The tariff will take effect on Sept. 1. Trump’s announcement came after Chinese and U.S. officials discussed trade earlier last week as the two countries tried to restart talks.

Key Takeaways…

I took the following CNBC screenshots today regarding repeat of May, why these tariffs are worse, Fed rate cut probabilities and driving the action:

Notable S&P 500 Movers…

Below I’ve highlighted some notable S&P movers (both winners & losers).

Credit: Sector Graph provided by Sector SPDR app. Sector breakdown provided by Charles Schwab. Sector heat map provided by finviz. Information Credit: News Headlines and quotes were taken from CNBC in the writing of this post.

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8/5/19

S&P 500 Sector Graph

Trade War Becomes Currency War

S&P 500 (SPY)

Trade War Becomes Currency War

Communication Services (XLC)

Trade War Becomes Currency War

Consumer Discretionary (XLY)

Trade War Becomes Currency War

Consumer Staples (XLP)

Trade War Becomes Currency War

Energy (XLE)

Trade War Becomes Currency War

Financials (XLF)

Trade War Becomes Currency War

Real Estate (XLRE)

Trade War Becomes Currency War

Healthcare (XLV)

Industrials (XLI)

Materials (XLB)

Technology (XLK)

Utilities (XLU)

S&P 500 Sector Heat Map

 

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