When the US market opened last night after President Trump unveiled his reciprocal tariffs, the reaction wasn't pretty. It was an especially brutal night for the Magnificent 7.
US stocks experienced their worst session since the pandemic. The S&P 500 Index (SP: .INX), which tracks the 500 largest listed companies in America, fell 4.84%. Meanwhile the tech-heavy Nasdaq Composite Index (NASDAQ: .IXIC) tumbled 5.97%.
For those invested in US-focused ASX ETFs, this is not the news you'd want to wake up to.
Those holding the BetaShares Nasdaq 100 ETF (ASX: NDQ), the Global X Fang+ ETF (ASX: FANG), or the iShares S&P 500 Aud ETF (ASX: IVV) may be nervous to check their portfolios today.
The Magnificent 7 companies make up a large portion of these ETFs. So, how did they fare?
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A forgettable session for the Magnificent 7
In stark contrast to the strong performance that investors have become accustomed to over the past couple of years, last night was a blood bath for the Magnificent 7.
No stock was spared.
However, each company has unique exposure to Trump's tariffs. Instead of looking solely at the share price reaction, it's important to assess the likely impact the tariffs could have on a company's business operations.
Which stock could fare the worst?
iPhone maker Apple Inc (NASDAQ: AAPL) is likely to be hardest hit by Trump's tariffs.
Despite Apple's effort to shift production out of China, the company will suffer greatly from the tariff announcement.
While Apple designs its technology in the United States, much of its supply chain for iPhones, Apple Watches, and iPads is outside the United States. More than 90% of Apple's products are produced in China, which was just hit with a further 34% tariff (meaning China now faces a 54% tariff).
Apple will need to either raise prices or absorb higher costs. Rising prices would likely weigh on demand. Those thinking of upgrading their devices might delay the purchase or search for a more affordable option. Morgan Stanley analysts estimate the tariffs could cut Apple's profit by 7% next year.
In Trump's first term, Apple CEO Tim Cook secured tariff exemptions. But with President Trump appearing unwilling to grant them for individual products this time, he may be out of luck.
Apple's share price fell 9.25% last night, the sharpest decline of the Magnificent 7 stocks.
However, long-term Apple investors are still way ahead of the market, with the stock up 237% over the past 5 years.
