Markets flat: EV carmakers struggle with soaring raw material costs

 

US equities finished mixed in Thursday trading, with the S&P shedding its morning strength.

Investors received more good economic news when the July producer price index showed a surprise decline from June. PPI dropped 0.5 per cent, compared with an estimate of a 0.2 per cent gain, according to a Dow Jones survey.

WSJ noted Fed will want to see more evidence of cooling inflation before deciding on magnitude of September tightening. Reuters reported Biden administration recalibrating thinking on whether to scrap some China tariffs or potentially impose new ones following ramp up in tensions surrounding Taiwan in wake of Pelosi visit.

Overnight both the S&P500 & the Dow were flat while the Nasdaq Composite slumped 0.58 per cent to end the day at 12,779.91.The three major averages opened the session higher but lost steam as the day progressed.

While investors are relieved that inflation is declining, it doesn’t change the fact that the Federal Reserve will continue to be hiking rates – so while sentiment is improving its questionable as to whether this is just a bear market rally or something more substantial

Energy was the standout sector on crude's rally post a 2.6 percent gain in the oil price. Best performing industries included Entertainment, banks, insurers, media, road/rail and machinery.

In after market hours trading, Illumina slumped nearly 23 per cent postmarket after the company missed top- and bottom-line estimates in the most recent quarter and issued disappointing guidance for the full year as it faces a troublesome macro environment

Rivian Automotive, the electric vehicle maker, rose 3.1 per cent in after-hours trading after beating revenue estimates and posting a smaller-than-expected loss in the latest quarter. Rivian reaffirmed its delivery estimates for the year but said it expects a larger loss than anticipated as it grapples with supply chain constraints.

Across the market Carmakers’ battery plans are at risk as raw material costs soar. It appears that there’s a lot of investment in battery cell manufacturing in Europe and the US, but not sufficient enough in the raw materials,” he said. “Right now, 85-90 per cent of materials that go into a battery are coming from China. So a big disconnect is coming particularly if you remember that car makes have had difficulty in ensuring semiconductors due to COVID supply chain issues. More crucially, availability of minerals is a looming problem for latecomers VW, Ford and GM, with the latter agreeing last week to pre-pay $200m to lithium producer Livent for supplies. Looking ahead there's an urgent emphasis to secure a supply chain away from China as the coronavirus pandemic and Russia’s brutal assault on Ukraine have made it clear that a reliance on global supply chains in certain strategic areas is a big risk.” This is the problem the EV industry is now looking to change with the support of western governments.

Currencies

The US Dollar index was flat though still off ~1.3 per cent for the week.

One Australian dollar has strengthened compared to the US dollar yesterday, buying 71.10 US cents  (Thu: 70.84 US cents), 58.35 Pence Sterling, 94.56 Yen and 68.92 Euro cents.

Commodities

Iron ore futures are pointing to a 0.4 per cent gain.

Gold lost 0.4 per cent to US$1807 an ounce.

Silver was down 1.9 per cent to US$20.35 an ounce.

Copper was up 1.6 per cent to US$370.65 a pound.

The SPI futures are pointing to a 0.3 per cent fall.

Figures around the globe

Across the Atlantic, European markets closed mixed. Paris added 0.3 per cent, Frankfurt fell 0.1 per cent and London’s FTSE closed 0.6 per cent lower.

Asian markets closed higher. Hong Kong’s Hang Seng gained 2.4 per cent, China’s Shanghai Composite closed 1.6 per cent higher while Tokyo’s Nikkei was closed.

Yesterday, the Australian sharemarket gained 1.1 per cent to 7071.

Ex-dividends

There is one company set to trade without the right to a dividend.

Suncorp Group (ASX:SUN) is paying 17 cents fully franked

Dividends payable

There are two companies set to pay eligible shareholders today.

Charter Hall Long WALE REIT (ASX:CLW)
Katana Capital (ASX:KAT)

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

Source: Finance News Network