Investors appear to have gotten what they wanted from the meeting in Japan between U.S. President Donald Trump and China’s Xi Jinping over the weekend. Both leaders agreed to go back to the negotiating table to settle the ongoing trade dispute which has threatened to derail the global economy.
In the run-up to this weekend’s G20 meeting, investors had already built up hopes for a positive outcome, as was evident from the stock market’s recent bull-run. The rose 6.9% in June, making it the best monthly advance since January, on optimism that the world’s two largest economies will find a way to resolve their differences and that the U.S.’s Fed will .
A truce in the trade tiff, however, doesn’t guarantee that trade-related uncertainties will be over soon, though it raises hopes that both countries are keen to avoid the worst outcome. With this macro backdrop, we’re keeping an eye on three mega caps that are among the most exposed to China. Each stock could see some positive momentum this coming week:
Chipmaker Nvidia (NASDAQ:) may lead an optimism-fueled rally in the semiconductor sector which has been extremely volatile, as investors shunned chip stocks amid an uncertain outlook for both demand and trade.
NVDA Weekly TTM
China is both a major market and a key part of Nvidia’s supply chains. More than half of the company’s are generated from the Asian country. The benchmark tumbled nearly 17% during May, its biggest one-month drop since November 2008, but it is up almost 13% in June, its best month since October 2011.
“Semiconductor suppliers have relatively high ‘ship-to’ revenue exposure to China,” Quinn Bolton, senior semiconductor analyst at Needham, said in a note in May. “This high exposure to China puts the semiconductor sector at greater risk