Wall Street set for weak opening on Huawei crackdown fallout fears

US stocks were set to open sharply lower today, as fears over the impact on major technology companies from the United States’ crackdown on China’s Huawei Technologies added to concerns about the trade war between the two counties. — Reuters pic
US stocks were set to open sharply lower today, as fears over the impact on major technology companies from the United States’ crackdown on China’s Huawei Technologies added to concerns about the trade war between the two counties. — Reuters pic

NEW YORK, May 20 — US stocks were set to open sharply lower today, as fears over the impact on major technology companies from the United States’ crackdown on China’s Huawei Technologies added to concerns about the trade war between the two counties.

US suppliers of Huawei including Qualcomm, Micron Technology and Broadcom Inc fell about 4 per cent premarket.

Apple Inc’s shares declined 2.9 per cent, also pressured by a warning from HSBC that higher prices for the company’s products following the increases in China tariffs could have “dire consequences” on demand.

Huawei, the world’s largest telecoms equipment maker, was officially added to a trade blacklist by the Trump administration on Thursday, escalating the already bitter trade war, while China on Monday accused the United States of harbouring “extravagant expectations” for a trade deal.

“For a lot of these tech companies, there is no bigger market than China and there is some concern it could forestall growth, also forces countries to take sides and begin to allow China to develop alternatives,” said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey.

“It’s a lot of speculation and there isn’t any basis. But it looks like the trade talks are getting worse and not better.”

Underscoring the hit to US tech cos, Lumentum Holdings Inc said it would halt shipments to Huawei and cut its quarterly revenue expectations.

Alphabet Inc’s Google has suspended some business with Huawei, Reuters reported over the weekend, while chipmakers including Intel Corp, Qualcomm, Xilinx Inc and Broadcom have told employees that they will not supply the Chinese company until further notice, Bloomberg reported on Sunday.

Shares of Alphabet, Facebook Inc and Microsoft Corp were all down 2 per cent.

At 8.51am ET, Dow e-minis were down 170 points, or 0.66 per cent. S&P 500 e-minis were down 23 points, or 0.8 per cent, and Nasdaq 100 e-minis were down 117.5 points, or 1.56 per cent.

Heightening trade tensions pushed the S&P 500 and the Nasdaq to their second successive weekly declines on Friday, while the Dow Jones Industrial Average index capped a fourth straight week of losses, the longest such losing streak in three years.

Investors will also look for comments from a clutch of retailers reporting this week including Home Depot, Nordstrom, Kohl’s and Target for comments on the impact of the latest round of tariff war.

With 460 of S&P 500 companies having posted first-quarter results, 75.2 per cent have topped analysts’ profit expectations. Analysts now expect first-quarter earnings growth of 1.4 per cent, a significant turnaround from the 2 per cent loss expected on April 1, according to Refinitiv data.

Also on the radar is Federal Reserve Chairman Jerome Powell’s speech on “Assessing Risks to our Financial System” at an Atlanta Federal Reserve Bank conference at 7pm ET (2300 GMT/7am Malaysian time). — Reuters