Morning bid: Tesla reports tanking, beating European business | 104.1 WIKY

A look at the day ahead in the US and global markets by Mike Dolan

Global markets have rallied somewhat this week, but Tesla’s ailing share price faces a critical earnings test later on Tuesday and this month’s European business pulse proved surprisingly buoyant.

The relief from easing tensions in the Middle East helped steady the ship on Monday after Wall Street’s worst week since 2022 – with chip giant Nvidia recouping some of Friday’s 10% slide, while Big Tech megacaps stand by ​​to report first quarter updates on three days of a week. heavy income diary.

The first of the ‘Magnificent 7’ vanguard stocks to report on Tuesday is electric car giant Tesla, which is down as much as 43% so far this year and is down nearly 60% over the past two years, amid a brutal price war and a declining demand for electric vehicles. global and serial corporate governance and product questions.

Tesla lost another 3% on Monday, despite Wall Street’s broader recovery, after it cut prices again in some of its key markets, including China and Germany, following price cuts in the United States. Outside of the hours before Tuesday’s bell, little had changed.

China’s state planner expects an intensified price war between automakers of electric cars and plug-in hybrids this year due to supply overhang and other issues, the government body said in a statement on Monday.

While Big Tech jitters characterize this month’s shakeout of the major stock indexes, investors will look to upcoming earnings reports for a clearer picture.

Artificial intelligence darling Nvidia, which is still up more than 50% for 2024, appeared to get a bid on last week’s significant dip – with worsening geopolitics among the factors impacting the shares.

Chinese universities and research institutes have recently acquired high-end Nvidia AI chips through resellers, despite the US extending a ban on sales of such technology to China last year, a Reuters investigation of procurement documents shows.

Moreover, Apple’s smartphone sales in China fell 19.1% in the first quarter of 2024, while those of rival Huawei grew 69.1%, indicating a growing threat to the US company’s dominance in the higher segment of the largest smartphone market in the world.

According to Counterpoint Research, Apple’s Chinese smartphone market share fell to 15.7% in the first three months.

More broadly, S&P500 futures pushed the cash market back above the 5,000 round number on Monday – with eyes now on both earnings season and growing pessimism about the chances of a Federal Reserve rate cut this year .

With Fed officials now in a blackout period ahead of their next policy decision on May 1, futures prices have cut 2024 easing expectations below 40 basis points for the first time this year and now see only an 80% chance of a interest rate cut of a quarter point before the November elections.

When some $69 billion in two-year Treasury notes came under the hammer later on Tuesday, the two-year yield hovered just below 5.0%.

Even despite stronger warnings from Japanese government officials about a possible intervention to support the yen, the dollar continued to post new 34-year highs against the Japanese currency, just below 155.

The Bank of Japan will raise rates again if trend inflation accelerates towards the 2% target as expected, BOJ Governor Kazuo Ueda said.

Flash business figures from the US in April will further color the picture today, with similar surveys already out in Europe and better forecasts. The German business community in particular unexpectedly returned to expansion mode this month.

That surprise boosted the euro – and pushed back the dollar’s broader DXY index a bit in the process – even as money markets are still more than 50% priced in for a European Central Bank rate cut when it happens in June .

Despite a miss in the manufacturing sector, overall UK business data also beat forecasts and lifted sterling from Monday’s five-month low.

The combination of recent weakness in the British pound and growing hopes for rate cuts from the Bank of England previously pushed the British blue chip FTSE 100 to a record high – even as it continues to lag the US and European benchmarks and domestically focused FTSE250 midcaps remain in the red. 2024.

Elsewhere, mainland Chinese stocks continued to underperform globally – although Hong Kong gained again on Tuesday on optimism over proposed reforms aimed at boosting the city’s attractiveness to foreign investors.

Delivery giant Meituan and e-commerce company JD.com led Tuesday’s gains, rising 8% and 6% respectively.

In Europe, a nearly 5% gain stood out in Novartis as the Swiss drugmaker raised its full-year outlook.

The shaky tech sector got a boost from SAP’s 4% rise after the German company reported a 24% increase in cloud revenue in the first quarter.

Back on Wall Street, the wait for Tesla’s update will be filled with updates from the likes of Texas Instruments, Visa, UPS, General Motors, Lockheed Martin and Halliburton.

Key agenda items that could provide direction to the US markets later on Tuesday:

*April Flash business surveys from the United States and around the world, US new home sales in March, Richmond Federal Reserve business surveys in April, Philadelphia Fed releases April services sector survey

* US Corporate Earnings: Tesla, Texas Instruments, Visa, MSCI, Invesco, Lockheed Martin, UPS, General Motors, Halliburton, GE, Chubb, Steel Dynamics, CoStar, Pepsico, IDEX, EQT, Baker Hughes, Seagate Technology, Quest Diagnostics, Freeport -McMoRan, Kimberly-Clark, Danaher, Nextera Energy, Enphase Energy, Pentair, Equity Residential, Veralto, Pultegroup, Fiserv, Sherwin-Williams, WR Berkley etc.

* Joachim Nagel, President of the Bundesbank and policymaker of the European Central Bank, speaks; Huw Pill, chief economist of the Bank of England, speaks

* US Secretary of State Antony Blinken visits China

* The US Treasury Department is selling $69 billion worth of 2-year bonds

(By Mike Dolan, Editing by Ed Osmond, [email protected])