By Ciara Linnane, MarketWatch
A range of stocks of companies with heavy exposure to China fell sharply Monday, after China allowed the yuan to fall to a fresh low against the dollar, exacerbating concerns about the current trade conflict with the U.S.
“Trade continues to trend in the wrong direction, as in retaliation for new tariffs, China let the yuan move to a 10-year low versus the U.S. dollar,” Ryan Detrick, senior market strategist at LPL Financial, said in emailed comments. “Any hopes of a quick resolution with China are fading quickly.”
China allowed the yuan to fall below the key 7-to-the-dollar level, after President Donald Trump’s threat last week to impose further tariffs of 10% on $300 billion of imports from China. The move has sparked a sharp selloff in global stock markets, with the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.36% down more than 500 points in early trade.
Tom Elliott, international investment strategist at Devere Group, a financial advisory organization, said the weaker yuan will export deflationary pressure around the world’s manufacturing industries.
“Chinese goods, always competitive on price, will be even more competitive,” said Elliott. “This is therefore bad news for manufacturers outside of China, at a time when global manufacturing is struggling with weakening demand growth and the negative impact of the U.S.-China trade dispute on their supply lines and profits.”
This time, the tariffs will apply to consumer goods, sweeping up a broader range of companies than earlier tariffs, including apparel and footwear companies. Those companies were mostly excluded from the 25% tariffs already imposed on $250 billion of goods from China, apart from accessories such as handbags, textiles, leather and cotton.
Against that background, Allen Edmonds and Dr. Scholl’s parent Caleres Inc. /zigman2/quotes/206226741/composite CAL -1.36% was down 4.3% and Sperry and Hush Puppies parent Wolverine World Wide Inc. /zigman2/quotes/209231729/composite WWW +3.92% was down 1.9%. Nike Inc. /zigman2/quotes/203439053/composite NKE +0.46% was down 1.9%, and Skechers USA was down 4.2%.
The Consumer Discretionary Select Sector SPDR Fund /zigman2/quotes/200844504/composite XLY +0.69% was down 2%.
Shares of Apple Inc. /zigman2/quotes/202934861/composite AAPL -0.52% , which both makes products in China and sells them there, were down 4%, while Best Buy /zigman2/quotes/205918291/composite BBY +0.18% was down 4.8%. Department-store chain Kohls Corp. /zigman2/quotes/210414114/composite KSS +0.96% was down 3.8%, and Nordstrom Inc. /zigman2/quotes/203902116/composite JWN -0.64% was down 3.4% and Macy’s Inc. /zigman2/quotes/201854387/composite M +0.30% 5.7%.
Other companies with sizable amounts of revenue coming from China were also sharply lower. Caterpillar Inc. /zigman2/quotes/203434128/composite CAT +0.49% was down 2.3%, FedEx Corp. /zigman2/quotes/203047719/composite FDX -0.98% was down 3.6%.
A.O. Smith Corp. /zigman2/quotes/208962119/composite AOS +0.62% , which sells heating and cooling systems along with air-purification systems in China, was down 1.7%.
The Industrial Select Sector SPDR Fund /zigman2/quotes/202026558/composite XLI -0.0099% was down 2.1%.
In the chip sector, Intel Corp. /zigman2/quotes/203649727/composite INTC -0.51% was off 3.3%, Advanced Micro Devices Inc. /zigman2/quotes/208144392/composite AMD -1.52% was down 4.1%. The PHLX Semiconductor Index /zigman2/quotes/210598361/realtime SOX -0.50% was down 3.8%.
Chinese ADRs were caught up in the downdraft. E-commerce giant Alibaba Group Holding Inc. /zigman2/quotes/201948298/composite BABA -0.26% was down 2.8%, electric car maker Nio Inc. /zigman2/quotes/204905836/composite NIO +0.37% was down 7%, internet giant JD.com Inc. /zigman2/quotes/205122565/composite JD -0.21% was down 5%, streaming company iQiyi Inc. /zigman2/quotes/203657421/composite IQ +0.76% was down 4% and shopping app Pinduoduo Inc. /zigman2/quotes/208876581/composite PDD +0.33% was down 4.7%.
All 30 components of the Dow Jones Industrial Average were lower. The S&P 500 /zigman2/quotes/210599714/realtime SPX +0.26% was down 2%, and the Nasdaq Composite /zigman2/quotes/210598365/realtime COMP -0.02% was saddled with a 200-plus-point decline.