The U.S. has eased some restrictions on China’s Huawei Technologies, on Monday. This has brought in some positive note into the Dow Jones.
The Commerce Department from the U.S. has allowed Huawei to procure U.S. manufactured goods for its existing networks. Further, software updates will be provided to Huawei handsets already in existence, until August 19.
This temporary easing in the telecom company has brought some respite to chip-making companies like Xilinx, Qualcomm, Micron Technology, which have gained about 1 to 2 percent each.
The trade tension between the U.S. and China has been disrupting the markets and the economy in a large way. With all hopes of an early resolution fading, investors had resigned to a slowdown in global growth.
Companies like Huawei and other 26 affiliates were blacklisted on Friday, which had further escalated tension between the U.S. and China. Markets were on the decline from this impact.
Strict action has been taken against Huawei and other companies as they are dealing in activities that are against the national security of the U.S said the Commerce Department.
Further, Alphabet’s Google had announced on Monday that it would shut software sales to Huawei’s handsets. But after the announcement, Google says it will hold back its block temporarily, as restrictions are eased.
With the restriction easing, markets were able to breathe some fresh air on Tuesday as the major indices saw a rebound.
All three benchmark indices were trading in the red on Monday. But Tuesday sees a mild rebound. The 200 DMA has been strong support for the index. A rebound from here will keep the index positive. With the Nasdaq and the S&P 500 below the 50 DMA, all attempts to recover have been futile. The markets must rebound above this 50 DMA barrier, to see a fresh up-move.
China’s Shanghai Composite was up by 1.2 percent with the Huawei news and capital infusion from PBOC.