SAN FRANCISCO (Reuters) – President Donald Trump's aggressive stance and the often mixed signals in his trade war with China take a toll on the shares of US companies that are most dependent on the world's second-largest economy.
Traders monitor monitors displaying a media conference with US President Donald Trump at a G7 meeting at the New York Stock Exchange's (NYSE) trading floor in New York, USA, August 26, 2019. REATERS / Andrew Kelly  US shares rose more than 1% on Monday after Trump predicted a trade agreement between the US and China following remarks by Deputy Prime Minister Liu He, who has led talks with Washington, that China is ready to resolve the dispute through "calm" talks.
On Friday, the S&P 500 crashed 2.6% after Trump announced an additional duty on about $ 550 billion in Chinese goods in retaliation for Beijing's announcement of higher tariffs earlier in the day. Trump also sent a tweet urging US companies to look for alternatives to doing business with China, but seemed unable to cede the threat on Sunday.
The escalating uncertainty surrounding Trump's intentions about the annual trade conflict adds pain to Wall Street, where investors worry that tariffs may steer the US economy into recession.
"This trade war has more storylines than a Quentin Tarantino movie," a senior OANDA market analyst wrote in a research note. He added that higher and broader tariffs would punish US consumers and potentially boost the US economy.
A basket of companies affected by the trade war created by Barclays sharply reached the S&P 500 this month after steady tracking with the broader market over the three previous months. Barclays' shopping cart includes companies that rely heavily on Chinese imports and are likely to face the pressure of profit margins such as Apple ( AAPL.O ), Nike ( NKE.N ) and Honeywell International ( HON.N ).
US semiconductor stocks also dropped this month. Micron Technology ( MU.O ), Qualcomm ( QCOM.O ) and Qorvo ( QRVO.O ) each receive 50% or more of their revenue from China , Consumer electronics and other semiconductor products will be included in additional U.S. tariffs starting September 1 and December 15, the US government announced this month. The Philadelphia Semiconductor .SOX lost almost 6% in August.
Trump's expanding trade war and the slowdown in China's economic expansion have hurt several other US industrial and material companies, which in recent years have relied on China to stimulate growth.
Detroit General Motors Co ( GM.N ) and Ford Motor Co ( F.N ) cars are lowering their year-over-year forecasts due to escalating tariffs. Caterpillar Inc ( CAT.N ) recently said that tariffs on Chinese imports are expected to increase its tangible costs by up to $ 200 million in the second half of 2019.
”The path forward is not secure at all and, by hanging on the beach for too long, investors may be burned out by next announcement of "surprise", warned Kingsview Asset Management portfolio manager Paul Nolte in white Monday for investors.
"Or a cool breeze may appear and everything will be fine with the world. This is really the best guess for anyone.
Report by Noel Randevich; Editing by Alden Bentley and Sonya Hepinstall