Behind the market rally, Tesla may be struggling in China

14Nov

Behind the market rally, Tesla may be struggling in China

 

The big question is whether markets can 'go on with it’ this week after Thursday’s mega bounce and Friday’s more restrained follow-up.

There’s a bit more data ahead with last week dominated by Thursday’s consumer price Index (CPI). This week it's the turn of the producer price index (PPI) to either confirm or undermine the hint of inflation relief from the CPI coming in under forecasts at an annual 7.7 per cent

Economists at Moody’s wrote at the weekend that "the producer price index serves as a good leading indicator of whether consumer price growth is likely to continue slowing in the near term.’

The S&P 500 closed out its best week since June as a report showing slowing inflation on Thursday raised hopes that the Federal Reserve would soon slow its tightening campaign. The broader market index added 0.9 per cent, bringing its gain for the week to 5.9 per cent, its best week since the week ending June 24 of this year. The Nasdaq Composite added 1.9 per cent and the Dow Jones Industrial Average gained 0.1 per cent.

Tech stocks on Friday shook off a decline in cryptocurrencies, which came under pressure Friday after FTX announced it’s filing for bankruptcy, Bitcoin fell 5 per cent, and Ether declined more than 3 per cent. Still, tech stocks and related crypto stocks rebounded after opening lower Friday.

The gyrations Elon Musk is engaging in at Twitter to save his $US44 billion investment is far more important to stockmarket sentiment than the continuing implosion of the crypto world.

As Elon Musk struggles to contain his growing losses at Twitter, Tesla’s struggles in China are raising questions about the revenue and earnings stability of the EV making giant. The past month has seen two price cuts for its Shanghai-produced Model 3 and Model Y vehicles sold into China. The cuts were not explained by Tesla and most reports said it was in response to the soaring sales of Chinese rivals, led by BYD.

And this is important for the renewables sector, especially lithium, cobalt, nickel and copper suppliers and battery makers. While demand won’t be hit in the medium to long term if Tesla loses its way, the short term impact could be very worrying.

Across the sectors Energy was the standout with Health Care lagging. 

Shares of Amazon were up more than 4 per cent, while Google-parent Alphabet was roughly 3 per cent higher.

Stocks with a high exposure to China popped after Beijing said it would lift some Covid restrictions, shortening quarantine time for international travellers by two days.

Casino stocks Wynn Resorts and Las Vegas Sands were more than 8 per cent and 6 per cent higher, respectively.

And on the earnings front this week the focus is on retail with Walmart ,Home Depot, Macy's and Kohl's all reporting which should give insight into how the consumer is reacting to higher prices.   

Currencies

One Australian dollar at 7:20 AM has strengthened compared to the US dollar on Friday buying 67.21 US cents (Fri: 66.24 US cents), 56.94 Pence Sterling, 93.32 Yen and 64.88 Euro cents.

Commodities

Iron ore is 4.7 per cent higher at US$92.25 tonne.

Iron ore futures are pointing to a 2.7 per cent gain.

Gold added $15.70 or 0.9 per cent to US$1769.40 an ounce.

Silver lost $0.04 or 0.2 per cent to US$21.67 an ounce.

Copper jumped $15.55 or 4.1 per cent to US$391.35 a pound.

Oil gained $2.49 or 2.9 per cent to US$88.96 a barrel.

Futures

The SPI futures are pointing to a 0.6 per cent gain.

Figures around the globe

Across the Atlantic, European markets closed mixed. Paris added 0.6 per cent, Frankfurt also gained 0.6 per cent and London’s FTSE closed 0.8 per cent lower.

In Asian markets, Tokyo’s Nikkei gained almost 3 per cent, Hong Kong’s Hang Seng jumped 7.7 per cent and China’s Shanghai Composite added 1.7 per cent.

On Friday, the Australian sharemarket gained 2.8 per cent to close at 7158.

Dividends payable

Harvey Norman Holdings (ASX:HVN)

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.
Copyright 2022 – Finance News Network


Source: Finance News Network

Share this post

Related Posts

03Apr

Over 10 million file for unemployment benefits in the US: ASX poised to open higher

03 Apr 2020 - After a rally from US markets, the ASX looks set to open higher. It’s been a rollercoaster of a week as investors monitor the COVID-19 crisis. Over one million people across the world have been infected, with over 51,000 losing their lives. The US now has the most recorded cases. Over 10-million Americans have filed for unemployment benefits since mid-March. SkyCity Entertainment Group (ASX:SKC) will immediately cut around 200 jobs in New Zealand, after standing...

Read More
31Dec

Dow snaps 6-day winning streak as Wall St falls: ASX poised to open lower

31 Dec 2021 - Wall St loses steam closing lower as the Santa Rally takes a breather. Dow snaps winning streak. Evergrande tumbles further on missed coupon payment. Magellan Financial (ASX:MFG) surges as best performer on the ASX on Thursday. Local bourse set to open lower for the last trading day of the year. ASX reopens on Tuesday 3 January 2022. Wishing you a Happy New Year!

Read More
13Feb

AMP suffers $2.5 billion loss: ASX set to open higher

13 Feb 2020 - The ASX looks set to open slightly higher this morning. European shares also rose. Iron ore rallied. In the US the Treasury department reported that the US budget deficit for the first four months of fiscal 2020 is $389.2 billion. AMP (ASX:AMP) released their financial year 19 results showing net loss attributable to shareholders of $2.5 billion.

Read More
18Jun

ASX tumbles as unemployment reaches 7.1%: Aus shares down 1.6% at noon

18 Jun 2020 - The Australian share market has been sliding since the open following mostly negative leads from Wall Street. The much-anticipated labour force data revealed that the national unemployed rate climbed to 7.1 per cent in May. All of the sectors except Consumer Staples have seen a sell off this morning. Shares in payment solution provider, Splitit Payments (ASX:SPT) are up almost 44% this mornign after it signed a multi-year agreement with Mastercard (NYSE:MA).

Read More
30Jul

US Fed rate decision boost global markets: ASX poised to open higher

30 Jul 2020 - The ASX looks set to open slightly higher this morning after the US central bank decided to keep interest rates at record lows for longer. Asian stocks look set for gains today after a signal from the Federal Reserve in the US that more stimulus will be provided. Back home futures rose here and in Japan and Hong Kong. Oceania Healthcare (ASX:OCA) announce dividend underwriting.

Read More
24Dec

Market to close early today for Christmas: ASX set to open higher

24 Dec 2020 - The ASX looks set to open higher this morning following leads from Wall Street and Europe. UK Bond yields and the British pound jumped yesterday on reports that a long-awaited Brexit trade deal between Britain and the EU was close. It’s a shortened session today with the market closing at 2:10 pm due to Christmas. Stocks often experience a Santa rally so we will be keeping our eyes open for that. The a2 Milk Company...

Read More
03Feb

IOOF Holdings (ASX:IFL) completes ANZ P&I acquisition: Aus shares 1.6% lower at noon

03 Feb 2020 - The Australian share market dove at the open on investor concerns over the economic impact of the coronavirus outbreak. According to Bloomberg, the country which was ground zero for the outbreak has seen oil demand drop by around 20% due to the virus. IOOF Holdings (ASX:IFL) has completed its acquisition of the Australia & New Zealand Banking Group pensions and investments business.

Read More
07Sep

Seesaw session sees shares end 0.3% higher: banks and miners offset industrials drag

07 Sep 2020 - The Australian share market finished a seesaw session firmly higher after a late rally. Biotech giant CSL (ASX:CSL) closed 1 per cent higher after news the Federal Government will fund the company to help it manufacture a COVID-19 vaccine. The major banks and miners helped to offset losses in energy and industrials. Shares slipped to one month lows at the open but clawed back to finish up 19 points or 0.3 per cent higher at...

Read More
15Jan

BNPL Payright (ASX:PYR) soars: Aus shares 0.3% higher at noon

15 Jan 2021 - The Australian share market opened slightly lower following negative leads from Wall Street, but is currently trading 0.3 per cent higher at noon. The tech sector is the best performer this morning and buy-now, pay-later player Afterpay (ASX:APT) is leading the gains and has hit a new record share price today. Australian buy-now, pay-later player, Payright (ASX:PYR), has reported a quarter-on-quarter jump of 28 per cent in gross merchandise value to $20.6 million for the...

Read More
07Jun

US markets trade sideways ahead of key payrolls data

07 Jun 2024 - Markets drifted sideways as investors remained on the sidelines ahead of the crucial May non-farm payrolls numbers due out Friday US time.

Read More