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Tesla hits speed breaker in vehicle deliveries

 

Tuesday, October 04, 2022

The news shaping the markets today

Ukraine’s troops seized back several villages annexed by Russia, breaking through Moscow’s defences in the southern part of the country and expanding their offensive in the eastern region. The safe-haven US dollar index rose slightly this morning.


Australia’s building permits climbed 28.1% to 17,497 units in August, following an 18.2% decline in the previous month. Although this was the first growth in building permits in three months, the AUD/USD forex pair remained under pressure.


South Korea’s manufacturing PMI fell to 47.3 in September, from 47.6 a month ago. This being the third consecutive month of contraction in the country’s factory activity sent the KRW/USD pair higher in forex trading this morning.


Brazil’s trade surplus narrowed to $3.99 billion in September, from $4.4 billion in the year-ago month. Imports climbed 24.9% year-over-year, while exports expanded by 18.8%. Despite this, the BRL/USD forex pair moved slightly higher after the news.


India’s trade deficit widened to $26.72 billion in September, from $22.59 billion in the year-ago month. Imports grew by 5.4% from a year ago to $59.35 billion, amid higher commodity prices, and sent the INR/USD pair lower in forex trading this morning.

 

What’s happening: Shares of Tesla fell on Monday, after the company reported delivery figures for the third quarter.

What happened: Tesla said its production of electric vehicles reached a new high.

The company also reported a record number of vehicle deliveries for the quarter, but the numbers still came in well below market expectations.

Why it matters: Tesla said it produced a record 365,923 vehicles during the quarter. The EV maker also delivered a new high of 343,830 cars in the same period, up 42% from the year-ago quarter and exceeding the first quarter’s record high of 310,048.

The delivery numbers comprised 325,158 Model 3 and Model Y vehicles and 18,672 Model S and Model X luxury vehicles. However, the delivery figure came in short of market expectations of 360,000, although deliveries were much higher than the second quarter’s 254,695.

Tesla cited logistical challenges for the downbeat delivery numbers. The latest report also reinforced worries around demand, mainly in China. The company’s Shanghai plant was forced into a lengthy shutdown and slow rebound in the second quarter amid China’s strict zero-covid policy.

“Historically, our delivery volumes have skewed towards the end of each quarter due to regional batch building of cars. As our production volumes continue to grow, it is becoming increasingly challenging to secure vehicle transportation capacity at a reasonable cost during these peak logistics weeks,” Tesla said in a statement.

How shares responded: Tesla’s shares fell 8.6% to close at $242.40 on Monday, following the release of delivery numbers. The stock has lost around 39% year to date.

What to watch: Investors await the release of Tesla’s full financial results for the third quarter, which are due after the closing bell on October 19.

The markets today

Crude oil will be in focus today ahead of the API’s (American Petroleum Institute) data

Context: US crude oil futures recorded sharp gains on Monday, climbing more than 5%.

Details: The OPEC+ (Organization of the Petroleum Exporting Countries and its allies) is reportedly considering reducing its output by more than 1 million bpd (barrels per day) to support prices.

If this is executed, it would be the biggest cut by the OPEC+ since the beginning of the covid-19 pandemic and will also mark the group’s second monthly reduction in a row, following a cut of 100,000 bpd in August.

Oil prices ended the fourth straight month in the red in September, with aggressive rate hikes by several major central banks around the world raising concerns around a global economic slowdown and weak demand for energy. Strict covid-19 lockdowns in China, the biggest crude importer, also impacted energy demand.

Continued strength in the US dollar has also been pulling oil prices lower, as a higher greenback makes commodities priced in the currency more expensive for foreign buyers.

However, the US dollar index, which measures the greenback’s performance versus a basket of major rivals, fell for a fourth straight day on Monday, boosting oil prices.

Brent crude futures for December delivery gained $3.72 to settle at $88.86 per barrel. WTI crude oil for November delivery climbed $4.14, or 5.2%, to close at $83.63 per barrel on Monday.

In another energy trading, wholesale gasoline for November delivery added 14 cents to $2.51 a gallon, while November natural gas declined 30 cents to $6.47 per 1,000 cubic feet.

What to watch: Traders await the release of API’s data on crude oil stockpiles. API’s crude oil inventories had risen by 4.15 million barrels in the week of September 23, after adding 1.04 million barrels in the prior week.

Other Markets: European stock indices closed higher on Monday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 up by 0.22%, 0.79%, 0.55% and 0.77%, respectively.

Support & resistances for today

Technical Levels News Sentiment
USD/JPY  – 144.81 and 144.92 Negative
GBP/USD – 1.1281 and 1.1308 Negative
Gold – 1704.19 and 1706.29 Positive
Natural Gas  – 6.488 and 6.501 Positive
CAC 40 – 5787.87 and 5802.47 Positive

Market snapshot

Futures at 0400 (GMT)
EUR/USD (0.9826, 0.01%) Dow ($29,643, 0.36%) Brent ($89.15, 0.3%)
GBP/USD (1.1299, -0.20%) S&P500 ($3,707, 0.45%) WTI ($83.72, 0.1%)
USD/JPY (144.87, 0.21%) Nasdaq ($11,356, 0.62%) Gold ($1,705, 0.2%)

What else to watch today

Spain’s unemployment change and tourist arrivals, Brazil’s IPC-Fipe inflation, Eurozone’s producer price inflation, US Redbook index, number of job openings, factory orders, total vehicle sales and Logistics Manager’s Index, as well as Argentina’s tax revenue.


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