- China’s trade-war retaliation sent the tech-heavy Nasdaq Composite index sliding more than 3% on Monday.
- US tech firms like Apple and microchip manufacturers with high exposure to the Chinese market were among those hit the hardest.
- The losses came after China allowed the yuan to fall past a key level against the US dollar, something President Trump called a “major violation.”
- The move is seen worsening the already-fraught trade relationship between the US and China — one stock investors have been watching closely in recent months.
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China fired back after President Trump escalated the trade war with new tariffs, and US tech stocks are being hit hardest.
The tech-heavy Nasdaq Composite index fell more than 3% on Monday after China’s central bank allowed its currency, the yuan, to fall below a crucial threshold versus the US dollar. Most adversely affected were tech firms with high exposure to China, which also made the sector the worst-performing in the S&P 500.
Trump described China’s devaluation move a “major violation,” and called it economic retaliation against the US. The new conflict marks just the latest flare-up in a months-long battle for trade supremacy — one for which a weak currency is preferred.
China has become a critical market for US tech companies selling everything from hardware to cloud services.
Shares of Apple were down as much as 5% due to the iPhone maker’s particular vulnerability to the Chinese market. The country has become an increasingly important driver for hardware sales, and Apple relies on China for manufacturing as well. The company did more than $9 billion in net sales in China during the second quarter of 2019, a 4% drop from the same period last year.
Chipmakers are also taking a beating. The iShares PHLX Semiconductor ETF, which tracks a basket of companies that design, manufacturer, and sell microchips, fell by more than 4%. Chipmakers have been forced to grapple with shrinking demand and a resulting supply glut due to the rising trade tensions and the US’s ban against Huawei.
Here are some of the major chip stocks falling on China’s retaliation:
Alphabet, Google’s parent company, was down more than 3% at its lows. Google’s Android is the most popular mobile operating system in China, and the company also sells hardware products and its cloud services in the country. The company has also been criticized in the past for some of its projects in China.
The Nasdaq Composite is down more than 6% from its all-time high reached in late-July, but still up roughly 17% year-to-date.