The realities of the U.S.-China trade spat are beginning to sink in for global investors, sending shares of automakers sinking on Thursday. Analysts warn companies in the tech, retail and industrial sectors could be next to come under pressure. The selloff in shares of car companies came after German automaker Daimler AG warned that Chinese duties on U.S.-made cars will likely weigh on its profits. Shares of the Mercedez Benz maker slid 4.3% on Thursday, while shares of Fiat Chrysler Automobiles N.V. dropped 4.8% and General Motors shares lost 2%. Analysts had identified the auto sector as one of several industries vulnerable to the tariff fight between the U.S. and China. This is due to their global production lines, heavy reliance on raw materials and big export businesses. With the first round of tariffs set to go into effect on $34 billion in U.S. and Chinese goods in just two weeks, investors are now reconciling those warnings with reality. Analysts at Bank of America Merrill Lynch said in a research note this week that U.S. companies that receive a large portion of their revenues from China are likely to face pressure. U.S. chipmakers, who supply many Chinese companies with semiconductors, are likely to be hurt. Skyworks Solutions receives 71% of its revenue from China, while 57% of Qualcomm's revenue comes from there. Their shares have fallen 4% and 2% this week, respectively. Higher costs could pinch profits at S&P 500 companies that rely on imported goods. Auto companies topped BAML's list on that score, followed by companies that sell home furniture, appliances and apparel. Shares of auto-part supplier BorgWarner fell 5% this week, while shares of Ralph Lauren shed 3%. Industrial companies like Boeing, down 5% this week, and Emerson Electric, off 4.3%, could get hit both by higher prices for things like steel and their high exposure to China. Which stocks are most exposed to the rise in trade tensions? Let the author know your thoughts at chelsey.dulaney@wsj.com. |