Apple (AAPL) stock was up 2.1% as of 1:08 PM ET today after falling 4.6% on Friday, August 23. On Friday, the stock plunged as China retaliated against the US with additional tariffs. The rise in Apple stock today followed President Trump’s comments that China wanted to return to the negotiation table.
The news also had a positive impact on Chipmaker stocks NVIDIA (NVDA), Qualcomm (QCOM), and Intel (INTC). These stocks rose 2.1%, 0.2%, and 1.5%, respectively, as of shortly after 1:00. These chip companies derive a huge proportion of their revenue from China.
Plus, the S&P 500, Dow Jones, and Nasdaq Composite were up 1.0%, 1.1%, and 1.2%, respectively, at the same time today.
According to CNBC, at the G-7 summit in Biarritz, France, Trump said, “China called last night our top trade people and said ‘let’s get back to the table’ so we will be getting back to the table and I think they want to do something. They have been hurt very badly but they understand this is the right thing to do and I have great respect for it. This is a very positive development for the world,”
Apple investors appear to have welcomed this news, as did the broader market today after the US-China trade war intensified on Friday. China announced that it would levy tariffs in the range of 5%–10% on $75 billion of US goods, including soybeans, coffee, and oil. The new tariffs on US imports would be imposed in two stages, effective September 1 and December 15. China retaliated after the US announced a 10% tariff on $300 billion of Chinese imports on August 1, including electronics, clothing, and footwear.
China’s retaliation on Friday escalated the tensions. President Trump declared that the US would increase tariffs on $250 billion of Chinese imports to 30% from the existing 25%. The higher tariffs would become effective on October 1. The President also decided to increase tariffs on $300 billion of Chinese goods to 15% from 10%, effective September 1. He also instructed US companies to move their production out of China.
Why Apple stock remains volatile
Apple stock has been highly volatile since the US-China trade war intensified. The stock fell 1.5% in the week ended August 9. It rose 2.7% in the week ended August 16. Last week, Apple stock was down 1.9%, mainly due to the sell-off on August 23.
Already, Apple is under pressure to address declining iPhone revenues. The iPhone remains the company’s largest revenue source. Moreover, the additional tariffs on Chinese imports pose a major threat to the tech giant since most of Apple’s products—like the iPhone and iPad—are manufactured in China.
China is also a key market for Apple. It accounted for about 17% of Apple’s revenue in the first nine months of fiscal 2019. Already, less-expensive smartphones are gaining market share from Apple in China and other countries. According to Canalys, Apple’s global smartphone shipments declined 13% year-over-year basis in the second quarter. Apple’s market share stood at 10.9% in Q2 of 2019. Comparatively, Apple’s market share was 12.2% in Q2 of 2018.
In contrast, Samsung was the market leader in the second quarter, based on global smartphone shipments. Samsung’s shipments rose 6% in Q2 and accounted for 23.2% of the global market share. Huawei’s worldwide shipments rose 8%. The company had a market share of 17.7%.
The US-China trade conflict will remain a major influence on Apple stock. Overall, Apple stock had risen 28.5% year-to-date as of August 23. Apple stock has outperformed the S&P 500, Dow Jones, and Nasdaq Composite, which rose 13.6%, 9.9%, and 16.8%, respectively.
