FAANGs but No Thanks! Top 5 Companies Leaking Cash — What Happened Last Week?
The best of the best in the tech world haven’t exactly had the best of summers. The US Department of Justice is hot on their heels, stock price is taking a hit and they’ve been so busy dealing with both of those things that they’ve not been able to get anywhere near the beach or a pool with their inflatable unicorn. It’s been a shocker.
In this article, we’ll explain what’s going on and what this all means for you, the investor. Should you go for it? Or hold onto your hard-earned cash. Read on to find out.
Umm, What’s a FAANG?
FAANG is the latest acronym for the biggest tech companies on the planet — Facebook (FB), Amazon (AMZN), Apple (AAPL), Netflix (NFLX) and Google (GOOGL). Got it? Good.
What’s up With These Guys?
Ohh, nothing much, just $150 billion of their market value vapourised quicker than you can say “pour me a cocktail.” Not a great day at the office. To put that figure into perspective, it’s more than the total value of companies like IBM. Wow.
The worst bit is, it’s not really because of anything they did wrong. There were no major PR screw-ups, nor were there juicy scandals. So, what happened? Five words: The US-Chinese Trade War. You see, every one of these tech companies is deeply reliant on China’s manufacturing industry, as they use a large amount of Chinese components in their products. As soon as tariffs are slapped on, supply drops and they have to start scrabbling for far more expensive parts in the domestic market.
Oops! So, How Bad did it Get?
$150 billion isn’t exactly pocket change, so it’s reeeally bad. Here’s what happened specifically:
● Apple was the biggest loser, its stock dropping 5.2% to close at $193.34, wiping away $53 billion from its market cap.
● Facebook faced the music, falling nearly 4% to close at $181.73.
● Amazon amassed losses of 3.2% to close at $1,765.13.
● Google said good-bye to 3.5% to close at $1,152.32.
● and Netflix dumped 3.5% to close at $307.63.
The Trade War Takes a Turn
It all got even more crazy following this news, as China let its currency, the yuan, weaken to below 7 to a dollar, in response to the Trump Administration’s recent announcement that it will impose new tariffs on Chinese goods (déjà vu, anyone?). This triggered a mad selloff that rippled through the broader markets. The Dow Jones Industrial Average slipped 3%, to close at 25,718 on Monday, while the Nasdaq dipped 3.5% to close at 7,726.
What Else is Going On this Week?
We have the usual smattering of important trading events coming up this week, here are the ones that should be on your radar:
● Tuesday sees the release of the UK’s ILO Unemployment Rate, which is the total number of unemployed workers divided by the total civilian labour force. As indicators for the UK economy go, it’s a pretty big one. Don’t miss!
● Wednesday is Q2 GDP day in Europe, with the EU releasing both YoY and MoM preliminary results, along with the Germans for their own economy. Keep an eye on those EUR pairs.
● Finally, traders will likely be going Down Under on Thursday, with the release of Australia’s employment/unemployment figures. Throw a shrimp on the barbie and make sure you tune in.
All of these events have been known to cause high volatility in the Forex markets, so they have the potential to represent fairly good opportunities. Remember to continue reading around all of these topics. A good investor is a smart one who uses all of the information at their disposal. So, keep yourself updated.
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