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Tesla’s stock down despite Musk’s latest comments

 

Tuesday, December 27, 2022

The news shaping the markets today

Ukraine’s President Volodomyr Zelenskyy thanked India’s premier Narendra Modi for sending humanitarian aid to Ukraine amid its war with Russia. WTI crude oil futures traded higher this morning.


China’s industrial profits fell by 3.6% on an annual basis to 7.7 trillion yuan in the January-November period. Despite this, the CNY/USD forex pair traded slightly higher with the reopening of the Chinese economy.


Japan’s retail sales grew 2.6% year-over-year in November, missing market expectations of 3.7% growth, which sent the JPY/USD pair lower in forex trading this morning.


South Korea’s Composite Consumer Sentiment Index rose to 89.9 in December, from 86.5 in the previous month, exerting pressure on the KRW/USD forex pair.


Brazil’s FGV Consumer Confidence Index climbed by 2.7 points to 88 in December. However, the BRL/USD pair fell in forex trading this morning.

 

What’s happening: Shares of Tesla tumbled to a new two-year low on Friday, despite comments from the company’s CEO.

What happened: The EV maker’s chief Elon Musk has sold a large volume of his shares in the company through the year.

Tesla’s stock fell again on Friday, even after the CEO assured investors that he would not be selling any more shares for at least two years..

Why it matters: During a live-audio Twitter Spaces conversation, Elon Musk said he’ll stop selling Tesla’s shares, after disposing of shares worth $40 billion.

“I won’t sell stock until I don’t know probably two years from now, definitely not next year under any circumstances, and probably not the year thereafter,” Musk said.

Musk had made similar announcements in April and August as well, but kept selling shares to fund his acquisition of Twitter Inc.

The CEO also warned of 2023 being a challenging year, with consumers spending less on big-ticket items. Tesla has lowered prices and reduced its vehicles production in China.

Musk also signalled a share buyback next year, pending better visibility on the state of the US economy. Musk also reassured investors who were worried that he was spending more time on Twitter than Tesla. He said he had not missed a single important meeting at Tesla.

Tesla’s stock moved lower on Friday continued a five-session losing streak, which sent the market value below the $400 billion level for the first time since November 2020.

How shares responded: Tesla’s shares fell to their weakest level since September 2020 on Friday, before recovering some losses. The stock declined by 1.8% to settle at $123.15 on Friday and has lost around 69% year to date.

What to watch: Investors will continue monitoring comments from Elon Musk and any updates on the situation in China as well as the US economy.

The markets today

US stocks will be in focus today ahead of a basket of economic reports

Context: Wall Street closed higher on Friday, with investors looking to buy undervalued stocks after the previous session’s losses.

Details: The US core personal consumption expenditures price index, which is the Fed’s preferred gauge of inflation, rose 0.2% in November, after a 0.3% increase in the previous month. The annual rate also eased to a four-month low of 4.7%, from 5% in the prior month.

Personal spending rose by a meagre 0.1% in November, while durable goods orders fell 2.1% in the month. The University of Michigan consumer sentiment index improved to 59.7 in December, compared to a preliminary reading of 59.1.

Markets have been concerned about a slowdown in the US economy with the Fed continuing to increase interest rates to curb inflation.

The Dow Jones index gained around 176 points, or 0.53%, to settle at 33,203.93 on Friday, while the S&P 500 rose 0.59% to 3,844.82. The Nasdaq 100 added 0.27% to close at 10,985.45.

The S&P 500 lost around 0.2% last week, recording losses for the third week in a row, while the Dow Jones index added 0.9%.

What are expectations: Investors await the release of economic data on US wholesale inventories, goods trade balance and home price index today. Wholesale inventories in the US, which rose by 0.5% to $923.8 billion in October, are expected to grow by 0.3% in November. The trade gap on goods is expected to narrow to $97 billion in November, from $98.8 billion in the previous month. The Case Shiller Home Price Index is projected to decline 1.2% in October, while the FHFA House Price Index is expected to decline by 0.3%.

Other Markets: European trading indices closed mostly higher on Friday, with the FTSE 100, DAX 40 and STOXX Europe 600 up by 0.05%, 0.19% and 0.04%, respectively, and the CAC 40 down by 0.20%.

Support & resistances for today

Technical Levels News Sentiment
EUR/USD  – 1.0638 and 1.0645 Positive
USD/CAD – 1.3565 and 1.3570 Negative
Nasdaq 100 – 10956.23 and 10998.27 Negative
Copper   – 3.8479 and 3.8552 Positive
Gold – 1811.49 and 1812.19 Negative

Market snapshot

Futures at 0400 (GMT)
EUR/USD (1.0646, 0.08%) Dow ($33,526, 0.45%) Brent ($84.77, 0.3%)
GBP/USD (1.2084, 0.12%) S&P500 ($3,893, 0.59%) WTI ($79.86, 0.4%)
USD/JPY (132.92, 0.03%) Nasdaq ($11,157, 0.74%) Gold ($1,812, 0.5%)

What else to watch today

France’s initial jobless claims and unemployed persons, Brazil’s loan growth, US Dallas Fed manufacturing index, as well as Argentina’s retail sales.


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