Shares of Apple Inc. soared 5.6% during pre-market sessions Tuesday after Washington deferred a 10% tax on selected Chinese goods, including tech products like smartphones and laptops. The opening trade's climb is Apple's most impressive one-day advance since last month.
Apple Inc (AAPL) is largely connected to economic matters with China, considering the Asian trade powerhouse is a crucial part of Apple's product line, not to mention a huge source of profit.
In a report by Bloomberg, almost 30% of the American tech giant's total earnings last year came from the Chinese mainland, with smartphones getting a huge slice of the sales pie. Apple's iPhone lineup represents over 61% of the company's global sales.
The imposition of a 10% tax on Chinese imports had been viewed as a big looming headwind. Based on analysis by Wedbush market strategist Daniel Ives, the US-sanctioned taxes would have cut Apple's sales by 51 to 56 cents per share by next year, had the new measure gone in full swing.
Apple wasn't the only tech firm to spark up the news, with Philadelphia Semiconductor Index rising almost 3% in early Tuesday sessions. Microchip manufacturers have been some of the heavily-affected by economic-related doubts, Wall Street observers noted.
Among early gainers Tuesday were semiconductor companies Texas Instruments, whose stocks rallied 2.5%, Micron Technology, with a 6.3% advance, and Applied Materials, which increased 2.6%. Tech retail firm Best Buy Co Inc., moved up as well, with 8.4% after an update on the delay.
The deferment in the new taxes on a considerable portion of China's $300-billion inventory of imports, drove Wall Street stocks climbing, after heavy declines in the last few days, with major indexes rising over 1.65%.
iPhone suppliers Taiyo Yuden gained 6.4%, as Murata Manufacturing and TDK Corp likewise surged 2.8% and 4.5%, respectively. Semiconductor maker Screen Holdings was also up 6.4% and chip maker supplier Tokyo Electron likewise grew 1.8%.
With smartphones and other electronic gadgets now free from the clutches of an upcoming 10% tariff until the middle of next month, Apple's latest soon-to-launch iPhone and holiday season profits should not be affected. Shares of the tech giant had been on the ascent as much as 6% in the past days.
Meanwhile, for some market observers, the data spoke against the US central bank initiating assertive decreases in interest rates, estimates of which have been very crucial in fanning market sentiment since the first quarter of the year.
