Huawei ban fallout hits Nasdaq as US stocks fall

May 21, 2019 | 09:17

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Shares of technology companies fell sharply on Monday (May 20) in down session for Wall Street after Google began to severe ties with Chinese telecom giant Huawei amid the US-China trade war.

huawei ban fallout hits nasdaq as us stocks fall

Traders work on the floor of the New York Stock Exchange (NYSE). (Spencer Platt/Getty Images/AFP)

The tech-rich Nasdaq Composite Index tumbled 113.91 points (1.46 per cent) to 7,702.38, with chip companies that do business with Huawei among the hardest hit.

The Dow Jones Industrial Average declined 84.10 points (0.33 per cent) to 25,679.90, while the broad-based S&P 500 fell 19.30 points (0.67 per cent) to 2,840.23.

Google, which makes the Android system used on many smartphones, said it was complying with a US order last week that barred US companies from engaging in telecommunications trade with foreign companies said to threaten American national security, a move targeting Chinese giant Huawei.

Shares of Google parent Alphabet shed two per cent, while chip companies like Micron Technology, Skyworks Solutions and Qualcomm all fell.

The losses added to a dismal stretch for semiconductors, which have lagged the S&P 500 over the last two weeks as the US-China trade war has worsened.

The Huawei ban "led to selling in the Chinese giant's suppliers and partners, since the likes of Intel, Alphabet, Broadcom, and Qualcomm would all register lower revenues should the ban remain in effect," said a note from Gorilla Trades strategist Ken Berman.

Among other companies, Sprint jumped 18.8 per cent and T-Mobile 3.9 per cent following an announcement that the Federal Communications Commission endorsed a merger of the companies.

Shares of both companies pulled back somewhat from peak levels after Bloomberg reported that the Justice Department was likely to oppose the deal. But both companies still ended significantly higher.

Ford slipped 0.1 per cent after announcing it would cut 7,000 jobs, or 10 per cent of its global salaried workforce, as part of a reorganisation.

AFP

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