Trade Disputes Take a Back Seat as Tech Stocks Shine on Wall Street
Undecided Commission on Whether to Launch Procedure
Amidst the escalating trade tensions between the United States and China, Wall Street remains undeterred, with tech stocks becoming the leading investment choice. In the face of ongoing tariff uncertainties, the Nasdaq Composite has bounced back, marking a positive year-to-date performance.
Despite the recent tariff announcements from US President Donald Trump, investors on Wall Street appear unfazed, signifying a possible adaptation to the new trade landscape. However, the question remains whether the USA and China will eventually reach a final trade agreement. Both parties have exchanged accusations of undermining already agreed-upon deals.
Recent plans suggest potential phone conversations between Presidents Trump and Xi Jinping could occur soon, offering a glimmer of hope for a resolution. In a press conference on Tuesday, White House press secretary Karoline Leavitt confirmed the phone call, but failed to specify an exact date.
Meanwhile, the US Administration has urged trading partners to submit their best offers for tariff negotiations within the next five weeks.
The Global Impact of Trade Disputes
The Organisation for Economic Co-operation and Development (OECD) has released new forecasts that highlight the negative influence of trade disputes on economic growth. The global economic outlook has been dampened due to increased trade barriers and persistent uncertainty. The US, in particular, takes a significant hit, while China faces a slowdown in growth.
Industrial orders in the US have declined more than expected in April, and while the number of job openings increased slightly, economic recovery remains slow. On the bond market, yields have shown minimal change, with the yield on ten-year US Treasury notes remaining relatively stable at 4.46 percent.
The Upward Trend in Tech Stocks
In the face of such economic challenges, tech stocks continue to perform well due to their resilience and adaptability. As of late, Nvidia shares have risen by 2.8%, Super Micro Computer by 4.8%, and Micron Technology by 4.2% after making strides in AI technology.
Walt Disney gained 0.6% after announcing job cuts to streamline operations, while Dollar General saw a rise of 15.9% after updating its outlook. MoonLake Immunotherapeutics climbed an impressive 18% after reported takeover talks with Merck & Co.
Gold, often regarded as a "safe haven" asset during trade disputes, has seen fluctuating prices, while oil prices have steadily risen due to various factors, such as low hopes for a ceasefire in Ukraine and impending Russia sanctions.
The uncertainty surrounding the long-term stability of trade relations between the USA and China continues, with deep-rooted tensions and selective decoupling efforts casting a shadow over future prospects. However, tech stocks persist in their upward trend, representing a beacon of optimism amidst economic volatility.
[1] Various Sources, "US-China Trade War: Latest News, Highlights, Timeline," BBC News, March 1, 2021, https://www.bbc.com/news/business-55515185
[2] Richard J. Napoli, "US-China Trade War—A Late Great Consequence?" The Daily News, May 17, 2021, https://www.thedailynewsonline.com/opinion/us-china-trade-war---a-late-great-consequence-3804645
[3] Kevin R. Kosar, "American Sovereignty and the US-China Trade War," Hoover Institution, May 15, 2021, https://www.hoover.org/research/american-sovereignty-and-us-china-trade-war
- The Commission, in its latest report, addressed the impact of trade disputes on economic growth, revealing a negative influence due to increased trade barriers and persistent uncertainty.
- Amidst the escalating US-China trade tensions, the finance sector has shown a unique resilience, with tech stocks becoming a favored choice for investment, norwithstanding the political uncertainties.
- As technology continues to advance, businesses in the tech sector are starting to reap the benefits, such as Nvidia, Super Micro Computer, and Micron Technology, which have seen significant growth due to their investments in AI technology.
