22 May

US Steel Stocks Pop after China Tariff Scare

WRITTEN BY Mohit Oberoi, CFA

US steel stocks

US steel stocks (XME) U.S. Steel Corporation (X) and AK Steel (AKS) are trading sharply higher today. Nucor (NUE) and Steel Dynamics (STLD) are also in the green. We saw a selling spree in US steel stocks yesterday as markets feared that China could also be exempt from the Section 232 steel tariffs.

US Steel Stocks Pop after China Tariff Scare

However, as we noted yesterday, the sell-off looked overdone for two key reasons. Firstly, it’s still uncertain whether Section 232 tariffs on China will be waived. Secondly, any action on Chinese steel exports now hardly moves the needle for the US steel industry since Chinese steel exports account for a fraction of total US steel imports.

Nevertheless, since China’s domestic steel consumption has slowed down this year, the country’s steel exports have registered a monthly rise for three consecutive months. Chinese overcapacity still remains the key risk for the global steel industry. See China’s Export Juggernaut Rolls on despite Trump’s Tariffs for a detailed analysis of China’s April trade data.

Smart rally

Coming back to US steel stocks, we see that they seem to be enjoying a smart rally today despite flat broader markets. But this performance doesn’t necessarily mean that uncertainty over Section 232 exemptions has died down. President Trump still needs to negotiate quotas with the countries that are exempt from the Section 232 tariffs. However, some regions—especially the European Union and NAFTA seem to be playing hardball over the Section 232 quotas. See Will Europe Fall in Line with Trump’s Steel Quotas? for how the Section 232 exemptions could play out.

Latest articles

On June 25, the soft economic data isn't an isolated case. We have been getting a flurry of dismal data points. The US economy added only 75,000 non-farm jobs in May.

French retail giant Carrefour has agreed to sell an 80% stake in its China operations for ~$705 million to Suning.com, an Alibaba (BABA) backed company. While China represents a massive opportunity with its almost 1.4 billion population, it has not been an easy market for foreign companies, at least when it comes to retail and e-commerce.

On June 25, US Secretary of Agriculture Sonny Perdue told CNN in an interview that the US-China trade war has impacted US farmers. He said that farmers “are one of the casualties” of the trade war.

25 Jun

Hang Seng and Nikkei 225 Lose amid Trade Worries

WRITTEN BY Mayur Sontakke, CFA, FRM

After rising marginally yesterday, Hong Kong’s Hang Seng Index fell today. The index lost 1.15% to end at 28,185.98. Only seven stocks in the index rose, while 39 declined. Four remained unchanged. Tencent Holdings (TCEHY) was one of the worst performers with a 1.8% fall.

Square (SQ) was absent from the list of the inaugural members of the Libra Association, the entity that will ensure that Facebook’s (FB) Libra cryptocurrency works as intended. Nearly 30 companies have joined the Libra Association.

Kroger (KR) stock fell 2.2% on June 20—the day the company announced its results for the first quarter, which ended on May 25. The negative sentiment for the stock continued.

172.31.59.107