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New opportunities on US Sino trade talks

The latest developments from the US Sino trade talks have kicked in offering a new perspective to analysts and new opportunities for investors to make money.

The fundamentals of the market have changed with the news tariffs and the markets have reacted accordingly.

Yet the question is now if risk is on or off the table.

Stocks and indices may now become indicators of how businesses view the developments while investors may focus on what will appreciate in value as the circumstances remain in uncertainty.

Yesterday, the Nasdaq Composite dropped 0.41%, falling to 7,910.59, the S&P 500 lost 0.30%, to 2,870.72 and the Dow Jones Industrial Average fell 0.54%, to 25,828.36.

Apple Inc. on China main land

We start first with technology stocks that reacted among S&P sectors, dropping 1.2%, with many analysts pointing the finger at iPhone maker Apple Inc. and other chipmakers.

The reason for this could be that these firms are significantly related to China’s market and their revenues depend on the Mainland.

Apple shares fell 1.8% and we may see a drop even lower if retaliation is observed, as the situation could escalate and even worsen.

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Chevron Corp drops the offer

Chevron Corp dropped its offer for the takeover bid for Anadarko Petroleum Corp on Thursday, as its competitor Occidental Petroleum Corp’s who competed for the bid, offered a more attractive deal.

Occidental Petroleum Corp was also backed by the legendary Warren Buffett with a heavy investment of approximately $10B which provided further interest for their offer.

Chevron officials stated that in order to surpass its rival’s offer they would have to take on further risk, which they were not willing to.

However, the outcome now leaves Chevron entitled to a $1B breakup fee under the terms of its April 12 merger agreement, which it said it now expects Anadarko to terminate.

Various analysts backed Chevron for the decision to leave the deal behind and the stock moved up by 2.7% yesterday.

3M proposed the acquisition of Acelity

We move to 3M which has been in the center of attention due to various reasons.

First we make reference to some financial indicators the firm released in late April which were not so positive for investor sentiment.

Revenues dropped by 0.5% in the first quarter while it’s CEO Mike Roman confirmed they remain in slowing conditions.

However he added that the company is countering the slowing conditions with restructuring and cost reduction methods.

Despite the slowdown, at the beginning of May, 3M proposed the acquisition of Acelity.

3M operates as a conglomerate business and has its hands in many industries so acquiring Acelity a private medical firm, does make sense to help boost business.

The conglomerate business has the advantage of a diversified business hedging risks.

Yet analysts are in doubts of 3M’s purchasing power and even though Acelity can help 3M boost investors’ confidence the 1Q results may have needed to be dealt with internally rather than reaching on the outside.

3M is rather serious about acquiring Acelity and its subsidiaries, offering the enormous US $6.7B, the largest acquisition amount in its history.

As a conclusion we stand to some data indicating that $20.5 billion have been moved out of global stock markets in the previous week with many believing the US-Sino trade deal uncertainty is the main reason of the outflow.

Bank of America Merrill Lynch stated that this was the third biggest outflow in 2019.

S&P500 Technical Outlook

In the previous days we have observed some selling of the S&P500.

If the bearish momentum is to continue we may see the index move downward for the (S1) 2836.96 support level and even drop lower for the (S2) 2819.21 support line.

Even lower we could see the (S3) 2804.55 support line.

In the opposite direction we could see the index moving above the 2874.00 resistance line and even higher for the (R2) 2892.15 resistance level.

Even higher, we may see the (R3) 2911.30 resistance level.

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