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Record Q4 Deliveries Drive Tesla Stock Higher

The news shaping the markets today

China’s general manufacturing PMI climbed to 50.9 in December, from 49.9 in the previous month. Despite this being the strongest reading since June, the CNY/USD forex pair came under pressure after the news.


Australia’s manufacturing PMI improved to 57.7 in December, from a preliminary reading of 57.4, and supported to the AUD/USD pair in forex trading this morning.


Japan’s au Jibun Bank manufacturing PMI rose to 54.3 in December, versus a preliminary estimate of 54.2. However, the latest reading came in below the reading of 54.5 a month ago, exerting pressure on the JPY/USD forex pair.


Thailand’s manufacturing PMI fell to 49.5 in December, from 50.6 in the previous month, sending the THB/USD pair lower in forex trading this morning.


Brazil reported a trade surplus of $4 billion in December, up from $2.7 billion in the year-ago month. However, the BRL/USD forex pair remained flat after the news.

 

What’s happening: Shares of Tesla climbed sharply on Monday, after the company reported upbeat deliveries for the fourth quarter.

What happened: The automaker reported record quarterly deliveries for the sixth straight quarter despite facing global chip shortages.

However, one of the major analysts maintained an Underweight rating for Tesla, while raising the price target.

Why it matters: Tesla, along with several other automakers, continued facing semiconductor shortages amid the covid-19 pandemic, impacting overall production. However, Tesla managed to boost production in China, despite rising competition and regulatory concerns.

The leading EV maker reported strong sales although it sharply increased vehicle prices in the US to offset higher raw material costs.

Tesla reported 308,600 vehicle deliveries in the fourth quarter, much higher than the consensus estimate of 263,000 vehicles. The company’s recent numbers were around 70% higher than the year-ago quarter and approximately 30% above the record deliveries reported in the previous quarter.

In 2021, Tesla’s deliveries jumped by a whopping 87% to 936,172 vehicles. The fourth-quarter deliveries included 296,850 Model 3/Y vehicles and 11,750 Model S/X units.

Although Tesla’s market capitalisation had surged past $1 trillion in October last year, the stock came under pressure after CEO Elon Musk announced plans of selling his 10% stake in the company.

Analyst at JPMorgan maintained an Underweight rating for Tesla but boosted the price target from $250 to $295. Other analysts, including RBC Capital Markets, Deutsche Bank, and CFRA, also lifted their price targets for the stock following the strong quarterly numbers.

Tesla’s competitor NIO delivered 91,429 vehicles in 2021, up 109.1%. Li Auto’s deliveries surged 177.4% to 90,491 units in the year.

How shares responded: Tesla’s shares jumped 13.5% to close at $1,199.78 on Monday following the release of quarterly numbers on Sunday. The stock gained around 50% in 2021.

What to watch: Investors will keep an eye on rising competition from several other automakers, which could impact Tesla’s sales in the ongoing quarter. Cowen analysts said in a note to clients, “As the competition heats up from incumbent OEMs and new entrants alike, we see 2022 becoming a critical year for Tesla.”

The markets today

Gold will be in focus today after recording a decline on Monday.

 

Context: Gold started the new year on a negative note, with prices for the yellow metal ending at their weakest level in around two weeks.

Details: Gold futures came under pressure on Monday as lower death and hospitalisation rates related to the Omicron variant lifted investor risk appetite and reduced the demand for safe-haven investment options.

Strength in the US dollar also exerted some pressure on gold prices. The US dollar index, which measures the greenback’s performance versus a basket of major rivals, added around 0.3% on Monday. Meanwhile, 10-year Treasury yields also hit their highest level since November.

February gold lost $28.50, or 1.6%, to close at $1,800.10 an ounce on Monday, after tumbling as low as $1,798.20 earlier in the session. Gold prices settled at the lowest level since December 21.

Gold added 0.9% last week, resulting in a 2.9% gain in December and about 4% over the last three months of 2021. However, gold prices ended the year with a loss of 3.6%, representing the biggest yearly decline since 2015.

March silver also fell 2.3% to close at $22.81 an ounce on Monday, after recording a 1.8% rise last week. The white metal ended 2021 with losses of around 11.5%, notching the sharpest annual decline since 2014.

March copper declined 0.9% to $4.422 a pound on Monday. April platinum settled at $954 an ounce, down 1.3%, while March palladium fell 4.5% to $1,826 an ounce.

What to watch: Traders await several major economic reports from around the world, which are likely to impact gold prices.

Rising covid-19 cases amid the spread of the Omicron variant remains a major concern for markets, with total global infections surpassing 292.9 million.

Other Markets: European trading indices closed higher on Monday, with the DAX 40, CAC 40 and STOXX Europe 600 up by 0.86%, 0.90% and 0.45%, respectively.

Support & resistances for today

Technical Levels News Sentiment
Nasdaq 100 – 16,472.81 and 16,513.66 Positive
Nikkei 225 – 29,174.16 and 29,223.66 Positive
Gold – 1,804.41 and 1,806.36 Positive
Silver – 22.748 and 22.831 Positive
USD/JPY – 115.50 and 115.68 Positive

 

Market snapshot

What else to watch today

Germany’s retail trade, unemployment rate, and unemployment change, France’s consumer price inflation rate and new car registrations, Spain’s tourist arrivals, UK’s consumer credit, mortgage approvals, manufacturing PMI, net lending to individuals and mortgage lending, US Logistics Manager’s Index, Redbook Index, ISM manufacturing PMI, job openings and API crude oil stocks, Mexico’s manufacturing confidence index, Canada’s raw materials price index, industrial product price and manufacturing PMI, South Africa’s total vehicle sales, as well as South Korea’s foreign exchange reserves.


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