Global Stocks Gain as U.S. Delays Ban Against Huawei

By Nathan Allen 

European stocks opened higher Tuesday following a broadly positive session in Asia after the Trump administration said it would grant temporary exemptions to the export blacklist against Huawei Technologies.

The Stoxx Europe 600 rose 0.4% in opening trade, with the U.K's FTSE 100 up 0.5% and Germany's DAX up 0.7%.

In Asia, China's Shanghai Stock Exchange was up 1.2%, while Korea's Kospi was trading 0.3% higher, though Hong Kong's Hang Seng dipped 0.5%.

Technology stocks led the gains in Europe, recovering some of the ground lost yesterday after Germany's Infineon said it would suspend deliveries to Huawei, sparking a selloff of European chip makers. Switzerland-listed AMS regained 2.8% this morning after dropping more than 13% on Monday.

The telecom sector was also in focus after Telecom Italia SpA stuck to its guidance, despite posting lower first-quarter earnings, driving its shares up 2%. In the U.S., Federal Communications Commission Chairman Ajit Pai on Monday said he would support the proposed $26 billion tie-up between T-Mobile US Inc. and Sprint Corp, removing one of the main hurdles to the merger.

Meanwhile, the U.S. Commerce Department overnight said it would grant 90-day licenses for some companies to continue exporting to Huawei and its associates, providing some respite after the crackdown on the Chinese telecom prompted a retreat from U.S. technology stocks, dragging down major indexes.

The S&P 500 closed 0.7% lower and the Dow Jones Industrial Average shed 0.3%, while the tech-heavy Nasdaq Composite declined 1.5%.

Last week's order effectively banned technology suppliers from exporting chips or other sensitive equipment to Huawei without a license, citing national-security concerns. To comply with the order, Alphabet's Google said it would restrict Huawei's access to certain features of its Android operating system, a move it later said had been put on hold after the Commerce Department delayed the ban.

Jasper Lawler, head of research at London Capital Group, said Monday's selloff served as a reality check for the Trump administration, demonstrating how pervasive Huawei's goods are and how intertwined the group has become with its counterparts in the U.S.

"This won't be a one-day event. Huawei is entrenched on so many parts of the tech sector, this could take days or weeks to untangle," he said.

Analysts at UBS said the back-and-forth between China and the U.S. was making it difficult for investors to take a definitive position.

"Our framework suggests the market is currently trading close to the midpoint between a full-on trade war scenario and a full-resolution of the trade dispute."

In the U.S., futures pointed to opening gains of around 0.3% for the S&P 500, 0.2% for the Dow Jones Industrial Average and 0.4% for the Nasdaq-100.

The yield on 10-year U.S. Treasurys edged up to 2.409% from 2.405% on Monday. Yields move inversely to prices. German 10-year government bonds were in negative territory at -0.090%.

In commodities, global benchmark Brent crude oil was down 0.1% at $71.92 a barrel, while gold ticked down by 0.2%.

The WSJ Dollar Index, which tracks the dollar against a basket of 16 currencies, was up 0.2%.

(END) Dow Jones Newswires

May 21, 2019 05:40 ET (09:40 GMT)

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