Apple shares rose more than 8 percent on Tuesday as the US decided to postpone tariffs on some Chinese goods.
The US technology giant shares surged 8.1 percent to settle at $ 208.6 at the end of today’s trading. Furthermore, the Dow Jones Industrial Average gained more than 400 points as the US chose to suspend tariffs on Chinese imports.
The Trump administration stated on Tuesday that it will delay duties on some goods from the beginning of next month to mid-December, including electronics such as laptops and mobile phones.
Also, trade negotiators from both China and the United States held phone discussions and agreed to hold further negotiations within the next two weeks.
Today, Apple shared a teaser for its expected drama “The Morning Show” starring Jennifer Aniston, Reese Witherspoon, and Steve Carell. The show will be presented this fall on the new digital media player Apple TV+.
The iPhone maker is highly correlated to trade issues with China, given that the country is both a key part of its supply chain as well as a major source of revenue. According to data compiled by Bloomberg, nearly 20% of Apple’s 2018 revenue was derived from China, with cellphones a dominant part of its overall business. The company’s iPhone represents more than 60% of its sales.
The 10% tariff had been seen as a major potential headwind. According to Wedbush analyst Daniel Ives, the tariffs would have lowered Apple’s 2020 earnings by 50 US cents to 55c a share had they gone into effect. (The consensus is for earnings of $12.76 a share in 2020, per Bloomberg data.)
“The overall China tariff/demand situation represents a $20-$25 overhang on Apple shares and will remain a lingering cloud over the story in the near-term,” Ives wrote in a note published on August 13, prior to the news about the tariff delay.
Apple was not the only company to spike off the news, with the Philadelphia semiconductor index jumping as much as 2.6% in morning trading. Chipmakers have been among the most affected by trade-related uncertainty; on Monday, Cowen wrote that a demand recovery for the industry was “likely capped until a trade resolution is reached”.