Markets opened in Asia and things started falling apart – US and China relations are worsening, economies are weakening.
Asia woke up this morning, rolled over and fell out of bed, flat on floor. The Japanese stock market collapsed today, falling 3.3 percent or over 600 points in morning trading. The recent announcement from Apple, falling short of revenue estimates and concern for a fading Chinese economy kicked the US stock marker lower, and how Japan is chasing it to the bottom. This sell-off that started in October and accelerated in December has not ended as the global investor base comes to terms with what could be a massive economic slow down – stocks will be punished.
Japanese tech giant Softbank saw its stock breakdown by 5.23 percent in morning trading while the Topix index fell by 2.3 percent. Stocks in Australia fell by 0.89 percent, this was the ASX 200 of course. Some investors suggested buying dips, but we are cautious and would only look at names that are down between 30% and 40% down from their highs. Look for FAANG type names that are suffering only because they are part of a sector, not because of their individual performance.
The ongoing US-China trade war is getting hot, and the result will be Apple, and other major tech names falling out of favor. These names are weak bu the sudden slowdown in the US ISM manufacturing index are taking all stocks to new lows – look for more pain.
Finally, the US State Department updated travel warnings about China, urging Americans to “exercise increased caution” and that the Chinese government has used exit bans on US citizens for years. More on this point in the coming week.