US: Trade war represents a risk to the US stock market – NFB

Matías Salord FXStreet

Matthieu Arseneau, analysts at the National Bank of Canada point out that US corporations could get hit in the market with an escalation of the trade war between the US and China.

Key Quotes:

“The U.S. stock market has been the third top performing stock market among the 49 countries in the MSCI ACWI index since early 2017 (following Brazil and Saudi Arabia). This development is certainly a source of pride for the current administration as we head into an election year. The ongoing trade war, however, represents a risk to the U.S. stock market.”

“We’ve argued several times that the U.S. corporations are not immunized against a trade war escalation as foreign sales account for no less than 43% of total revenues for the S&P 500 listed companies.”

“Stocks of firms with the largest foreign exposures are still outperforming by a significant margin the ones tilted towards the domestic economy. This advantage can wane fast if trade tensions do not abate in the coming weeks. Recent S&P500 drawdowns have indeed been felt more acutely for these corporations.”

Author

Matías Salord

FXStreet

Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.

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