Signs of Progress in US-Sino Trade Talks Boosts These ETFs

Shutterstock photo

Providing little relief, President Trump recently talked about a positive development in his dealings with China over trade. However, he did not provide details. Trump and China President Xi Jinping are scheduled to meet in person at the G-20 summit in Argentina in late November.

U.S.-China trade tensions have peaked this year with the Trump administration enacting  25% tariffs  on $50 billion of Chinese goods. In retaliation, China mainly targeted American soybeans along with other goods (read:  China's Likely Retaliation to US Tariffs & Its Impact on ETFs ).

The United States went on to levy more tariffs on Chinese goods worth $200 billion starting Sep 24. This will push up prices on goods ranging from  handbags to bicycle tires, per the source . The tariffs, which started at 10%, will shoot up to 25% on Jan 1, 2019.

There were also reports that say that Trump is preparing  more tariffs on imports from China worth $257 billion  if talks with Xi Jinping see no success. Though nothing has settled on the trade resolution front (as noted by the National Economic Council ), there was a certain level of confidence in the market lately.

Below we highlight two ETF areas that gained considerably on progress in U.S.-Sino trade talks.


Semiconductor stocks gained the maximum since 2015 on Oct 25 after three Apple suppliers , NXP Semiconductors NXPI , Dialog Semiconductor DLGS and Qorvo Inc QRVO , came up with upbeat earnings. Since semiconductor is one of the most affected by the trade war, indications of positive trade talks soothed investors' nerves (read: Why October Spells Doom for Semis: ETFs in Focus ).

Per Morgan Stanley equity strategists, "semiconductor and semiconductor equipment companies have the highest revenue exposure to China at  52% " and are thus exposed to maximum risks on rising trade tensions. VanEck Vectors Semiconductor ETF SMH gained 4.8% Nov 1, iShares PHLX Semiconductor ETF SOXX advanced 4.7% and Invesco Dynamic Semiconductors ETF PSI rose about 4.3% (read:  Apple's iPhone Order Cut Report May Hurt These ETFs ).


Industrial Select Sector SPDR ETF XLI added about 1.8% on Nov 1. Since the manufacturing sector has a direct relation to trade, the sector got a boost. Boeing Co BA (up 2.3%) and Caterpillar Inc CAT (up 2.8%) were among the companies that drove the space (read: Industrial ETFs in Focus Post Q3 Earnings ).

Want key ETF info delivered straight to your inbox?

Zacks' free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.  Get it free >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Qorvo, Inc. (QRVO): Free Stock Analysis Report

The Boeing Company (BA): Free Stock Analysis Report

PWRSH-DYN SEMI (PSI): ETF Research Reports

VANECK-SEMICON (SMH): ETF Research Reports

SPDR-INDU SELS (XLI): ETF Research Reports

ISHARS-PHLX SEM (SOXX): ETF Research Reports

Caterpillar Inc. (CAT): Free Stock Analysis Report

NXP Semiconductors N.V. (NXPI): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , ETFs
Referenced Symbols: QRVO , BA , PSI , SMH , XLI

More from Zacks.com




Equity Research

Research Brokers before you trade

Want to trade FX?