GM shares in focus on extreme weekend headline risk GM shares in focus on extreme weekend headline risk GM shares in focus on extreme weekend headline risk

GM shares in focus on extreme weekend headline risk

Equities 4 minutes to read
Michael McKenna

Head of Editorial Content, Saxo Bank

Summary:  Shares of General Motors, the US' most Mexico-reliant automaker, rebounded this week as high-level talks on migration barriers met with a degree of receptiveness in Washington, but the headline risk over the weekend is extreme given the scale of the rebound and President Trump's volatile style.

On Monday, we brought your attention to the sharp drop in General Motors shares following US president Donald Trump’s announcement of a 5% tariff on all goods entering the US from Mexico starting June 10.

Trump’s goal was to secure Mexico’s cooperation regarding the flow of migrants from Central America travelling to the US via Mexico. In response, the Mexican government immediately sent a senior delegation to Washington with promises of a profound crackdown, including the movement of troops to its own southern border.

Mexican exports to the US amount to 28% of Mexican GDP, with automakers representing the single largest component of that share.

Shares of General Motors rebounded sharply from their initial post-announcement dip, rallying from just north of $33/share to over $36 Wednesday; they closed Thursday at $35.19.

A Deutsche Bank report estimated that GM could take a $6.3 billion hit before interest and taxes if the 5% tariff, itself set to rise to 25% if Washington is not satisfied with the Mexican response, goes into effect.

The risk now is that markets may be too willing to bet on the Republican Party’s traditional free-trade orthodoxy carrying the day. Yesterday, Trump told Fox News that automakers “should be ashamed” of resisting his tariff plan, claiming that the Central American migrant inflow is a key national security issue.

The situation remains risky and headline-driven for automotive sector investors, with shares of GM and other carmakers likely to re-test local lows on any sign that Trump means business.

GM shares, post-rebound, are nearing longer-term resistance just shy of $36 into Friday’s New York session.

Investors should be cautious of the steep headline risks as talks head into Monday; the GOP may be aghast at Trump’s latest deployment of protectionist measures, but the president is unlikely to welcome appearing as a paper tiger in the midst of the broader trade conflict with China.
General Motors (hourly, source: Saxo Bank)
General Motors (hourly, source: Saxo Bank)


The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (
- Full disclaimer (

Saxo Markets
40 Bank Street, 26th floor
E14 5DA
United Kingdom

Contact Saxo

Select region

United Kingdom
United Kingdom

Trade Responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more
Additional Key Information Documents are available in our trading platform.

Saxo Markets is a registered Trading Name of Saxo Capital Markets UK Ltd (‘SCML’). SCML is authorised and regulated by the Financial Conduct Authority, Firm Reference Number 551422. Registered address: 26th Floor, 40 Bank Street, Canary Wharf, London E14 5DA. Company number 7413871. Registered in England & Wales.

This website, including the information and materials contained in it, are not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in the United States, Belgium or any other jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation.

It is important that you understand that with investments, your capital is at risk. Past performance is not a guide to future performance. It is your responsibility to ensure that you make an informed decision about whether or not to invest with us. If you are still unsure if investing is right for you, please seek independent advice. Saxo Markets assumes no liability for any loss sustained from trading in accordance with a recommendation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc. Android is a trademark of Google Inc.

©   since 1992