One chart shows an under-the-radar reason Trump's trade war could hurt US stocks
Apollo flagged a less-talked-about reason the trade war could impact the US stock market.
The firm's top economist pointed to the record-high foreign ownership in US stocks.
A lower US trade deficit means fewer dollars held overseas that could make their way back to US markets.
The trade war could be inflationary and create headwinds to growth, but there's another reason Donald Trump's tariffs could negatively impact US stocks.
Apollo Global Management's Torsten Slok pointed to the record-high ownership of US stocks among foreign investors, who own 18% of the total US equity market, according to the firm's analysis of Federal Reserve data.
Check out their chart below.
"This is the mirror image of a trade deficit. Foreigners selling goods to the US receive dollars in return, which are then used to purchase US assets, including US equities," Torsten Sløk, Apollo's chief economist, wrote in a note on Wednesday. "If the trade deficit is eliminated, there will be fewer dollars for foreigners to recycle into the S&P 500."
Foreign investors have already shown signs that they're beginning to sour on the US market amid the turmoil around tariffs.
Goldman Sachs estimated that foreign investors sold around $60 billion worth of US stocks from the start of March through late April.
Most global investors, meanwhile, see international stocks as beating US peers over the next five years, according to a fund manager survey conducted by Bank of America from June 6 to June 12.
In its June survey, 54% of investors said they believed international equities would be the best-performing asset, compared to just 23% who believed US equities would be the top performers.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
35 minutes ago
- Yahoo
Stock market today: Dow, S&P 500 and Nasdaq futures rise as stocks set to end June with a bang
US stock futures edged higher Sunday evening, setting up the major indexes for more records to end one of the most volatile first halves of a year in recent memory. Futures tied to the Dow Jones Industrial Average (YM=F) rose around 0.5%. Contracts on the S&P 500 (ES=F) gained 0.2%, and Nasdaq 100 (NQ=F) futures ticked up 0.3%. Several of Trump's economic agenda items are in focus this week. A July 9 deadline looms before the possible resumption of Trump's unilateral tariffs, which Trump on Sunday said he didn't think he'd "need to" extend. On the trade front, India has extended its Washington visit to finalize a deal. Administration officials last week confirmed a trade framework with China was in place, bolstering investor sentiment despite a late-Friday dip triggered by Trump's abrupt halt to talks with Canada, citing its digital tax policy. Meanwhile, market watchers are closely following Senate negotiations over Trump's proposed $4.5 trillion tax cut bill. The measure, which passed a procedural vote Saturday, could face a tough path in the House. The Congressional Budget Office estimates it would add $3.3 trillion to the deficit over a decade. For the market, June's gains have been substantial, fueled by optimism surrounding global trade and easing fears over tariffs. The S&P 500 (^GSPC) is up over 4%, the Nasdaq Composite (^IXIC) has surged over 5.5%, and the Dow (^DJI) has climbed 3.5%. On Friday, all three major indexes closed higher, with the S&P and Nasdaq reaching new record highs for the first time since February — the start of the year's tariff-fueled stock swings. All three major indexes are up at least 3% so far this year. Looking ahead, investors will monitor key Chinese PMI data due Monday to gauge how the ongoing trade war is affecting Asia's largest economy. Despite lingering uncertainties, the broader market remains upbeat heading into the new quarter and second half.
CNBC
38 minutes ago
- CNBC
CNBC Daily Open: The S&P 500 hits a high — but as Trump gives, so can he take
Something I rarely, if ever, say: What a wonderful Monday morning! On Friday stateside, the S&P 500 broke its previous record. Celebrations were shared with the Nasdaq Composite, which also hit a new high. The tech-heavy index enjoyed a liftoff from Nvidia and Microsoft, both of which reached all-time highs (and probably made some insiders at Nvidia multi-millionaires over the past month). Tariff relief buoyed sentiment in markets. China announced it had finalized details of its deal with the United States. And even though U.S. President Donald Trump's "reciprocal" tariffs are due to kick in (again) one week later, he suggested that his administration "can do whatever we want" regarding the 90-day pause. Postponing the return of those tariffs would give investors further cheer and put another feather, perhaps of the chicken variety, in their caps. That said, as Trump giveth, so does he taketh away. The S&P 500 was up as much as 0.76% at one point during Friday's trading session, but stumbled after the U.S. president slammed the door shut on trade talks with Canada over its digital services tax. Investors took the news in their stride. The index only dipped slightly, but that nonetheless shaved off some gains. U.S. markets open just before Asia heads to bed. May it be in Trump's nature to be a giver, to borrow Chappell Roan's words — so Monday can end as well as it began. New record for S&P 500. The broad-based index rose 0.52% to close at 6,173.07 Friday, surpassing its previous high of 6,147.43. U.S. futures ticked up Sunday evening stateside. The Stoxx Europe 600 popped 1.14% Friday as shares of Barclays and Deutsche Bank rallied to decade highs. China confirms trade deal details with America. The framework covers the export of rare earth metals from China, and the easing of tech restrictions imposed by the U.S., according to a statement released by Beijing on Friday. Trump said the same day he can do "whatever" he wants with tariffs. Talks with Canada 'terminated.' Trump on Friday abruptly announced that the U.S. is ending trade discussions over Ottawa's decision to impose a digital services tax on American tech firms, which will affect titans such as Amazon, Google and Meta. U.S. consumers paid more for goods and services in May. The core personal consumption expenditures price index rose a seasonally adjusted 0.2% for the month, putting annual inflation at 2.7%. Both figures were 10 basis points higher than expected. [PRO] Eyes on U.S. jobs numbers. June's nonfarm payrolls report comes out Thursday and could determine if the rally in U.S. markets continues. Investors will only have half a day to react: U.S. markets close early Thursday and are dark Friday. China's biggest public AI drop since DeepSeek is about to hit the market On Monday, Chinese technology giant Baidu plans to make its Ernie generative AI large language model open source, a move by China's tech sector that could be its biggest in the AI race since the emergence of DeepSeek. "Baidu just threw a Molotov into the AI world," said Alec Strasmore, founder of AI advisory Epic Loot. "OpenAI, Anthropic, DeepSeek, all these guys who thought they were selling top-notch champagne are about to realize that Baidu will be giving away something just as powerful," Strasmore said, comparing Baidu's move to Costco creating Kirkland.
Yahoo
38 minutes ago
- Yahoo
Oil falls on prospect of more OPEC+ supply, easing risks in Mideast
By Florence Tan SINGAPORE (Reuters) -Oil prices fell 1% on Monday as an easing of geopolitical risks in the Middle East and the prospect of another OPEC+ output hike in August boosted the supply outlook. Brent crude futures fell 66 cents, or 0.97%, to $67.11 a barrel by 0031 GMT, ahead of the August contract's expiry later on Monday. The more active September contract was at $65.97, down 83 cents. U.S. West Texas Intermediate crude dropped 94 cents, or 1.43%, to $64.58 a barrel. Last week, both benchmarks posted their biggest weekly decline since March 2023, but they are set to finish higher in June with a second consecutive monthly gain of more than 5%. A 12-day war that started with Israel targeting Iran's nuclear facilities on June 13 caused Brent prices to surge above $80 a barrel after the U.S. bombed Iran's nuclear facilities and then slump to $67 after President Donald Trump announced an Iran-Israel ceasefire. The market has stripped out most of the geopolitical risk premium built into the price following the Iran-Israel ceasefire, IG markets analyst Tony Sycamore said in a note. Further weighing on the market, four delegates from OPEC+, which includes allies of the Organization of the Petroleum Exporting Countries, said the group was set to boost production by 411,000 barrels per day in August, following similar-size output increases for May, June and July. OPEC+ is set to meet on July 6 and this would be the fifth monthly increase since the group started unwinding production cuts in April. In the U.S., the number of operating oil rigs, an indicator of future output, fell by six to 432 last week, the lowest level since October 2021, Baker Hughes said.
