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Effects of the China-US Trade Negotiations

U.S. Army Chief of Staff, Gen. Ray Odierno met with commanders of the People's Liberation Army (PLA) in Beijing, China, Feb. 21, 2014. Gen. Odierno, spoke with different Chinese commanders to strengthen and promote military to military relations between the United States and China. (U.S. Army Photo by Sgt. Mikki L. Sprenkle/Released)

The ongoing China-US trade war on tariff threats is scheduled to come to a close by the end of the year. It has been a long two years’ tit-for-tat game between the two countries and which has mostly affected the market. However, even with high hopes for a solution, the market is still unstable, even with the first phase being completed. According to the Wall Street Journal, these trade wars will decide how the market ends up the year. This is after the Federal Reserve’s third straight ratio cut this week.

The long-term trade deal with the US is said to have created doubts in the China market, causing a stock hit on Thursday. However, the shares recovered to a new high on Friday last week. China is, nonetheless, dubious of any possibilities of a long-term agreement with the United States. The major stock markets, such as the New York Stock Exchange and the NASDAQ, are at stake of winning or losing by the end of the trade wars. They also happen to be the best actively traded stocks amid investors as they make their bets.

Since the Huawei’s blacklisting by the Trump administration, chipmakers have been very profound in trading headlines. The May blacklist halted the firm’s ability to purchase chips made in the US due to state security threat trepidations. A report released by Refinitiv shows a list of the 25 best S&P 500 firms with China’s highest revenue exposure. These include Broadcom, Micron Tech, NVidia, Qualcomm, AMD, and Qorvo. The list is inclusive of Apple with a 19.6 percent sales potential with China.

The technology giant had feared a rise in its supply costs and rallying sales in its emerging markets due to tariff wars. Apple is said to have reported higher earnings and crucial holiday prediction issues. However, investors are still cautious about the stock prices of the giant tech Apple. The firms with substantial China proceeds potential are Las Vegas Sands and Wynn Resorts with 61% and 75%, respectively. The revenues are due to the casino’s massive footmark in Macau.

While these giants are celebrating high yields, some are most vulnerable to fail as a result of the trade-wars. Generally, information technology’s exposure is approximately 10 percent, which is highest amid 11 companies in the S&P 500. On average, China generates over 6% sales for materials, communication, and healthcare services. Real estate, energy, and utilities have a low-income exposure of 4%, 2.7%, and 1.4%, respectively.