Market Outlook – June 28, 2018

Trade Anxieties Bring Down U.S. Benchmarks

 

The main U.S. benchmarks fell again on Wednesday as investors fear that a real trade war could damage global economies. The Dow Jones Industrial Average dropped 165.52 points (-0.68%) while the broader S&P 500 Index shed 23.43 points (-0.86%). The tech-heavy Nasdaq Composite Index lost by 116.54 points (-1.54%).

Both the Dow Jones and S&P 500 blew their biggest intra day high since February. The blue-chip index soared to an intra day high of 285.91 points then faltered. The S&P 500 peaked 0.85% but dropped -0.9% at the close.

China to Monitor U.S. Policies on Inbound Investments

 

China’s commerce ministry spokesman Gao Feng told reporters on Thursday that Beijing would carefully monitor U.S. policies on inbound investments. Gao Feng also stressed that the country opposes using national security as grounds to restrict foreign investments.

On Wednesday, U.S. President Donald Trump said he will use a strengthened national security review process to thwart Chinese acquisitions of sensitive American technologies. It was a softer approach than imposing China-specific investment restrictions.

Auto Trade Groups Warn Trump of Tariff Consequences

 

Two major auto trade groups issued a warning to the Trump administration on Wednesday that imposing up to 25% tariffs on imported vehicles would result to loss of auto jobs that could reach hundreds of thousands.

The tariffs would also dramatically increase  vehicle prices and pose a threat to industry spending on self-driving cars. One coalition represented major foreign automakers including BMW AG, Hyundai Motor Co., Toyota Motor Corp., and Volkswagen AG.

The other group is the Alliance of Automobile Manufacturers which represents Ford Motor Co. (F), Daimler AG, and General Motors Co. (GM) among others. The alliance urged White House that imposing tariffs on imported vehicles and vehicle components will ultimately harm U.S. economic security and weaken national security.

U.S. DOJ Allows Disney to Acquire Fox Assets

 

The roadblock to Walt Disney Co.’s (DIS) bid to purchase the entertainment assets of 21st Century Fox Inc. (FOXA) has been eliminated. The U.S. Justice Department reached a settlement where Disney would sell 22 of Fox’s regional sports networks.

However, a federal judge needs to approve the settlement and Fox shareholders would also have to vote in favor of the deal. Meanwhile, cable and media giant Comcast Corp.(CMCSA) has not yet responded to Disney’s sweetened offer for Fox.

Tesla in Overdrive to Meet Month-End Target

 

The sign is clear that Tesla Inc. (TSLA) is in overdrive mode to meet its month-end production target of the Model 3 cars. Panasonic Corp., the exclusive battery cell supplier for Tesla’s current production models, is reporting occasional battery cell shortages.

On Thursday, Yoshio Ito, head of Panasonic’s automotive business, reported to its general shareholders that there had been a “sharp improvement in production” that was leading to occasional battery (cell) shortages. Tesla CEO Elon Musk said in early June that his company should achieve its 5,000 cars-per-week target by the end of June.

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