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Impact of Rising U.S.-China Trade Tensions on Global Markets
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U.S.-China trade tensions are escalating. The Biden administration is tightening regulations on chip exports to China and increasing tariffs on Chinese goods. If reelected, Trump plans to impose even higher tariffs.
JPMorgan views China's utilities sector as a potential beneficiary amid these tensions. Historically, during previous trade conflicts, utilities have outperformed the broader market by an average of 12.8%.
Europe could encounter challenges. Goldman Sachs forecasts that Trump's proposed 10% tariff could decrease the euro area's GDP by one percentage point, affecting European stocks' earnings-per-share by six to seven percentage points.
Defensive stocks, such as utilities and healthcare, might gain from rising trade risks. Cyclical stocks, including autos and industrials, could be adversely impacted.
Global chip stocks, including ASML, Nvidia, and TSMC, faced setbacks due to potential trade restrictions. This could hinder mega tech earnings growth, but any significant sell-off might offer buying opportunities.
| Scores | Value | Explanation |
|---|---|---|
| Objectivity | 6 | Comprehensive reporting with in-depth analysis. |
| Social Impact | 5 | Significantly influences public opinion. |
| Credibility | 5 | Solid evidence from authoritative sources. |
| Potential | 5 | Almost certain to trigger larger events. |
| Practicality | 4 | Highly practical, applicable to real problems. |
| Entertainment Value | 3 | Some entertainment value, attracts a portion of the audience. |