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Tesla’s stock surges after upbeat Q4 print

 

Thursday, January 26, 2023

The news shaping the markets today

Germany announced plans to send 14 of their own tanks, while US said it would send 31 Abrams tanks to Ukraine in the ongoing war with Russia. The safe-haven US dollar index remained flat this morning.


UK car production fell 17.9% year-over-year in December. The figure turning negative after recording growth in October and November exerted pressure on the GBP/USD forex pair.


South Korea’s economy shrank 0.4% in the three months to December, compared to a 0.3% expansion in the prior quarter. Despite this being the first contraction since the second quarter of 2020, the KRW/USD pair rose in forex trading this morning.


Ireland’s KBC Bank consumer sentiment index rose to a seven-month high of 55.2 in January, from 48.7 in December, lending some support to the EUR/USD forex pair.


The Philippine economy grew 7.2% year-over-year in the fourth quarter, following a 7.6% expansion in the prior quarter. The latest reading also surpassed market estimates of 6.5% growth, lending support to the PHP/USD forex pair.

 

What’s happening: Shares of Tesla gained in after-hours trading on Wednesday, after the company released results for its fourth quarter.

What happened: The record delivery of electric vehicles during the last quarter of 2022 helped Tesla reported better-than-expected quarterly results on Wednesday.

Although the electric vehicle maker fell short of its delivery forecast last year, it is expected to increase deliveries significantly this year.

How were the results: The Austin, Texas-based company said the latest quarter marked the highest revenue and net income in its history.

  • Revenues grew 37% year-over-year to $24.32 billion, which exceeded the consensus estimates of $24.16 billion.
  • Adjusted earnings surged nearly 40% to $1.19 per share, beating Wall Street expectations of $1.13 per share.

Why it matters: Tesla generated massive growth in sales and profits over the past couple of years, weathering the covid-19 storm and supply chain concerns better than its peers. However, the company has now announced steep price cuts, which could impact its profit margins ahead.

Tesla’s automotive operation margins came in at 25.9% in the fourth quarter, the weakest in two years. Vehicle production jumped 44% year-over-year to 439,701 units, while deliveries came in at a record 405,278 electric vehicles, despite the company missing its 50% annual growth target.

The company said solar deployment climbed 18% year-over-year to 100 MW in the fourth quarter, while energy storage jumped 152% year-over-year to 2,462 MWh.

Tesla ended the quarter with cash of $22.2 billion. The company also said there were digital assets worth $184 million on its balance sheet, compared to $218 million in the second and third quarters.

The company said it is looking to increase vehicle deliveries by 37% to 1.8 million units in 2023.

How shares responded: Tesla’s shares gained 5.5% to $152.39 in the extended trading session, after adding 0.4% during the regular session on Wednesday. The stock has around 44% over the past six months.

What to watch: Investors will focus on the company’s highly anticipated Cybertruck, with the company being on track to commence production of the vehicle this year at its Gigafactory in Texas.

The markets today

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

Context: The US dollar moved lower on Wednesday, with traders awaiting minutes from next week’s meetings of major central banks.

Details: Both the Federal Reserve and the European Central Bank are scheduled to meet next week and announce their monetary policy decision.

Traders expect the Fed to hike interest rates by 25 basis points next Wednesday, compared to an increase of 50 bps in December. The ECB is expected to increase its key rate by 50 bps next week.

Many Asian markets remained closed due to the Chinese Lunar New Year holidays, which resulted in major currencies trading in compressed ranges. The absence of big economic data releases from the US on Wednesday also resulted in forex trading remaining range bound on Wednesday.

The US dollar index, which measures the greenback’s performance versus a basket of major currencies, fell around 0.2% to 101.64 on Wednesday.

The EUR/USD forex pair rose close to 0.3% to reach 1.0915, near its nine-month high of 1.0927 recorded on Monday. The US dollar also fell around 0.5% against the Japanese yen on Wednesday, after reaching close to a 8-month low on January 16. The GBP/USD forex pair gained around 0.6% to 1.2404.

What are expectations: Traders await economic reports on GDP growth rate, wholesale inventories, initial jobless claims and core PCE prices from the US today. The US economy, which grew an annualised 3.2% in the third quarter, is expected to expand by 2.7% in the fourth quarter. Analysts expect wholesale inventories to grow 0.4% in December, following a 1% rise in the previous month.

The number of persons filing new claims for jobless benefits, which fell by 15,000 to 190,000 in the week ending January 14, is expected to increase to 202,000 in the latest week. Analysts expect core PCE prices in the US to accelerate 3.9% in the fourth quarter, following a 4.7% rise in the previous quarter.

Other Markets: European indices closed lower on Wednesday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 down by 0.16%, 0.08%, 0.09% and 0.29%, respectively.

Support & resistances for today

Technical Levels News Sentiment
USD/JPY – 129.23 and 129.49 Negative
USD/CAD – 1.3396 and 1.3406 Negative
Gold – 1944.71 and 1946.61 Negative
Copper – 4.2376 and 4.2478 Positive
FTSE 100 – 7731.82 and 7746.26 Positive

Market snapshot

Futures at 0400 (GMT)
EUR/USD (1.0916, 0.01%) Dow ($33,824, 0.01%) Brent ($86.40, 0.2%)
GBP/USD (1.2398, -0.05%) S&P500 ($4,034, 0.05%) WTI ($80.56, 0.5%)
USD/JPY (129.50, -0.08%) Nasdaq ($11,903, 0.25%) Gold ($1,946, 0.2%)

What else to watch today

Spain’s unemployment rate, Italy’s consumer confidence and manufacturing confidence, South Africa’s producer price inflation, UK’s labour productivity and CBI distributive trades survey’s retail sales balance, Canada’s CFIB business barometer, Turkey’s MPC meeting summary, inflation report and foreign exchange reserves, Mexico’s unemployment rate, Brazil’s current account and foreign direct investment, South Africa Reserve Bank’s interest rate decision, Canada’s average weekly earnings and wholesale sales, as well as US durable goods orders, goods trade balance, continuing jobless claims, new home sales, natural gas stocks change, and Kansas City Fed’s manufacturing production index.


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