Stock trading with FXTM

27 December, 2018

Stock trading with FXTM: Market sentiment rocked by trade tensions

By Nandik Barbhaiya, FXTM Global head of marketing

Global, award-winning broker FXTM is making shares across every major industry (including technology, financial services, pharmaceuticals and energy) available to its traders to own and trade.

Elite FXTM traders will now be able to buy and sell shares of companies with the largest market capitalisation in the world, including Apple, Amazon, Microsoft, Facebook and Alibaba. Stock trading is available on FXTM’s Pro account for MT5, which offers highly competitive trading conditions such as superfast execution, tight spreads and no requotes.

A real-time feed keeps traders informed of the latest market movements. This up-to-the-minute data comes as an especially welcome feature considering the turbulence that has plagued the stock market in recent months, and tech stocks in particular.

After sudden, sharp selloffs in November which began with the tech sector and soon spread across global equities, market sentiment was temporarily buoyed by a potential thawing in trade relations between the US and China following the G20 summit. FXTM Global Head of Marketing Nandik Barbhaiya takes a look at some of the factors weighing on tech stocks (and Apple in particular) and questions what the markets might have in store for FAANGs (Facebook, Amazon, Apple, Netflix and Google’s parent company Alphabet) moving into 2019.  

Tech selloffs as FAANGs falter

Amid general concerns about a looming slowdown in the global economy, trade war pressures and tepid consumer spending, October and November were tough months for the tech sector. Bulls finally gave up the control they had exerted over the markets for ten long years. Over $1 trillion was wiped off FAANGs collectively, pushing the market officially into bear territory in November (a drop of 20 per cent or more from 52-week highs). A partial recovery followed, but investors remained cautious.

Even Apple has lost a great deal of its shine, shedding $200 billion in market value (a drop of 21 per cent) in November alone. On 28 November, non-FAANG Microsoft leapfrogged Apple to become the most valuable single company in the US, a spot the company hadn’t occupied since 2010. Faltering global demand for smartphones is threatening iPhone sales, which at present account for over 60 per cent of Apple’s revenue. Apple’s refusal to make its exact unit sales public caused share prices to plummet 6.6 per cent.

Then there’s the ever-present threat of escalating US-China trade tensions. The markets awaited the G20 summit with no small amount of anxiety, considering that US President Trump had announced that he was considering further tariffs on Chinese exports to encourage Apple to move production to the US. The ensuing price increases would inevitably put further pressure on Apple’s sales figures.

Global markets remain highly sensitive to trade tension

In good news for the markets, the feared third round of tariff escalations did not materialise and instead a 90-day reprieve to increased levies was promised by both parties. It was by no means a permanent solution to the tensions between the two largest global economies, but the markets seemed cheered by the certainty that the situation is less likely to devolve any further for the next three months.

The first day of trading following the announcement showed deep relief across the world. Wall Street rallied on the news, with NASDAQ leaping 2 per cent and Apple shares jumping 1.8 per cent. Trade tensions are a market pressure investors cannot afford to ignore, as there are implications far beyond Apple’s production woes. Staying just in the tech sector, an estimated $168 billion has been wiped off China’s biggest tech performers, Baidu, Tencent and Alibaba, thanks in large part to Trump’s punishing tariffs. Shares in beleaguered Alibaba have dropped almost 30 per cent from their peak.

As expected, this boost to sentiment remained relatively short-lived. In December, Apple and Alphabet erased their gains for the entire year. A much-hoped-for ‘Santa Claus rally’ (a phenomenon in which the stock market enjoys steady increases in the last few weeks of December and the first days of January) is looking less likely. Analysts expect that anxiety over trade tensions, and worries over a coming global recession will dampen investor sentiment even as the festive season gets underway.

Trading stocks with FXTM

The market volatility caused by the shifting phases of the US-China trade war offer plenty of potential investment opportunities to stock market participants. With FXTM’s newest financial product, traders can exercise their judgement as to the relative values of some of the popular stocks in the world, including Alibaba, Apple, and Microsoft.

For regular updates and commentary on the latest market movements, please visit the FXTM daily market analysis page. To start trading stocks with a trusted broker, open your FXTM account. Only available to clients under the FT Global entity.

Disclaimer: This written/visual material is comprised of personal opinions and ideas. The content should not be construed as containing any type of investment advice and/or a solicitation for any transactions. It does not imply an obligation to purchase investment services, nor does it guarantee or predict future performance. FXTM, its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness of any information or data made available and assume no liability for any loss arising from any investment based on the same.

Risk Warning: There is a high level of risk involved with trading leveraged products such as forex and CFDs. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 90% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

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