Stocks have had a volatile start to the week due to investors not knowing the full effect the trade agreement will have on the market and futures. The United States and China signed the first-phase of the long awaited trade deal on Wednesday. The S&P 500
But the two nations have agreed on a trading future for the next two years. The composition of the $200 billion additional goods China will purchase include: Manufactured goods: $32.9 billion in 2020, $44.8 billion in 2021; Agricultural goods: $12.5 billion in 2020, $19.5 billion in 2021; Energy goods: $18.5 billion in 2020, $33.9 billion in 2021; Services: $12.8 billion in 2020, $25.1 billion in 2021. Manufactured goods include industrial and electric equipment, pharmaceuticals and vehicles.
ETFs in Focus Following U.S.- China Trade Deal:
Consumer: U.S. companies have paid $46 billion in tariffs since the start of the trade war over a year ago. Since the U.S. is still imposing tariffs on $250 billion in Chinese products, many companies many begin to pass the additional cost unto the consumer. Funds that will be effected by an increase in consumer cost include iShares U.S. Consumer Services ETF
Industrials & Materials: Industrial Select Sector SPDR Fun
Technology & Semiconductors: Large-cap semiconductor companies like NVIDIA and Qualcomm have majority of their revenue exposure based in China, according to a Goldman Sachs'
Automotive: Due to steal and aluminum being vital to the production of cars, the longstanding tariffs on these materials will definitely affect the production and sales of various car brands. One fund to follow is First Trust Nasdaq Global Auto Index Fund
Big Banks: As the financial markets have been on the rise ahead of the trade agreement and are poised to gain in 2020. While a popular trade is usually Financial Select Sector SPDR Fund
China: iShares MSCI China ETF