Tuesday's Market Minute: FedEx Fights Back

FedEx Corporation FDX is suing the U.S. Dept. of Commerce after shares lost 2.7% Monday in a delivery error connected with Chinese telecom giant Huawei.

Concerns that China would blacklist the U.S.-based global delivery service after it returned a Huawei device meant to be delivered in the States back to its sender in the U.K. sent shares lower yesterday. The suit alleges the U.S. government puts undue liability on FedEx for any knowledge of deliveries that go against U.S. trade regulations and violates a carrier’s rights under the Fifth Amendment. A company press release states: “FedEx is a transportation company, not a law enforcement agency.”

FedEx reports earnings this afternoon. Out of today’s report, revised guidance and international revenue will be key indicators of how the company is already positioned to combat further issues with China. FedEx’s revenue from international business declined last quarter due to slowing international macro conditions and weaker global trade growth, according to its CFO. Also, the company’s FY19 outlook was conditional on “no further weakening in international economic conditions.”

In the options market, the expected move for the June 28 expiration is +/- $9.17. Meanwhile, President Trump and President Xi are set to meet on the second day of the G20 Summit in Japan later this week.

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