Whether you’re reeling from Eurovision defeat (congrats Netherlands, by the way), or still somber about Game of Thrones coming to an end, you’re probably not as annoyed as the top bods in Huawei HQ right now. Let’s see how the markets reacted.

What Did Happen?

ICYMI — Last week, US President Donald Trump issued a shiny new executive order which officially barred US companies from using information and communication technology made or controlled by firms that pose a ‘national security risk’. Mr. T didn’t exactly say who the target of this move was, but I think we can safely say that it begins with ‘C’, ends in ‘A’ and has ‘HIN’ in the middle!

Fast forward to this week and, low and behold, US-based tech mammoth, Google, announced that it was pulling Huawei’s Android license. The phone maker will now be restricted to using the Android Open Source Project (AOSP), cutting the company off from critical Google apps and services that Android users have come to know and love. Cue almighty boo hoo.

Is Huawei a Big Deal, Then?

Yep! Huawei has been making quite a name for itself recently, pipping Apple (11.7%) on its way to second spot in the global mobile phone sales space (2019Q1), with 19% market share, gaining pace on South Korean market leader, Samsung (23.1%).

What’s Up with the US and China, Anyway?

Time to pay off the mortgage on your cave and move out, you’ve been in there way too long if you’re not aware that the US and China are gripped in an epic struggle to protect their own interests. The US-China trade war has been raging for some time now, with technology, seemingly at its heart. Huawei has been the focus of intense international scrutiny lately, with the US and other countries raising security concerns about its products.

With a 19% share of the global market, there are a lot of Huawei handsets out there and consumers are now being thrust right into the middle of what is already being dubbed the next technological Cold War.

How Did the Markets React?

Shares in the companies involved in the production of handsets obviously took a hit. Qualcomm, Broadcom, Micron Technology, and Nvidia shares fell by more than 3%, initially, sending the tech-heavy Nasdaq index down 1.5%.

Fortunately for many, the US has, overnight, rowed back some of the sanctions, albeit for the short term, with Huawei now being given 90 days to purchase American-made goods. Phew!

The markets rebounded in kind, with Asian indexes regaining lost ground. The Shanghai Composite climbed 1.2%, the SZSE Component jumped 1.9%, and Hong Kong’s Hang Seng rose 1.3%. European equities opened higher on Tuesday, with the DAX up 0.6%, the FTSE 100 up 0.5%, and the Euro Stoxx 50 up 0.4%. DJI Average futures rose 128 points. Futures on the S&P 500 and Nasdaq 100 were also higher.

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TIO Staff

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