Market Overview

CNBC Takes Closer Look At Auto Stocks Amid Trade War Concerns

CNBC Takes Closer Look At Auto Stocks Amid Trade War Concerns

China is the world's largest market for cars, and a slowdown in its domestic economy presents a potential challenge for U.S. automakers who sell to Chinese consumers, CNBC's Phil LeBeau said Monday on "Squawk Box."

What Happened

Whenever global trade tensions escalate, shares of automaker General Motors Company (NYSE: GM) come under pressure, since China is its biggest market, LeBeau said.

Smaller auto companies are not immune from China-related concerns, including Tesla Inc (NASDAQ: TSLA), which is reportedly raising prices in China as soon as Friday — earlier than expected, according to CNBC. 

A new U.S.-Japan trade deal that was discussed during the G-7 summit doesn't appear to remove tariffs on Japan-based automakers like Toyota Motor Corp (NYSE: TM) and Honda Motor Co Ltd (NYSE: HMC), LeBeau said.

A Diverse Auto Play

The auto maker is plagued with "too much uncertainty," but investors looking for some form of exposure may want to consider the iShares S&P Global Consumer Dis Sec (NYSE: RXI) ETF, Blue Line Futures President Bill Baruch said on a recent CNBC "Trading Nation" segment.

The ETF's two biggest holdings are, Inc. (NASDAQ: AMZN) and Mcdonald's Corp (NYSE: MCD), followed by global automaker Toyota, Baruch said.

The ETF offers access to the global automarket while also diversifying "without idiosyncratic risk," he said. 

The Consumer Discretionary ETF shows a "good support line" at the $112 level and could be seen as a "good place" to get "some exposure in autos," Baruch said. 

Related Links:

Market Bounces Back After Trump Suggests 'Very Positive Development' In Trade War

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