Upbeat sales drive NIO shares higher

The news shaping the markets today

Russian President Vladimir Putin said they may completely cut off energy exports to the West in case a cap on energy prices is instated. WTI crude oil prices traded higher on the news.

Japan’s current account surplus narrowed to ¥229 billion in July, from ¥1,715 billion in the year-ago month, exerting pressure on the JPY/USD forex pair.

Australia’s trade surplus shrank to a five-month low of A$8.73 billion in July, from a revised A$17.13 billion a month ago, sending the AUD/USD pair lower in forex trading this morning.

New Zealand’s manufacturing sales contracted by 7.4% year-over-year in the second quarter, following a 3.6% decline in the prior period, which exerted pressure on the NZD/USD forex pair.

The Philippines reported a decline in its unemployment rate to 5.2% in July, from 7.2% in the year-ago month. However, the PHP/USD pair declined in forex trading this morning.

What’s happening: Shares of NIO Inc. gained on Wednesday, after the company released results for its second quarter.

What happened: The Chinese company reported upbeat revenues for the latest quarter, but the top line grew at the slowest pace in the last nine quarters.

Shares of the electric vehicle manufacturer initially declined following the release of earnings and rebounded later in the session.

How were the results: The Chinese EV maker reported a loss for the second quarter, with the bottom-line figure missing market views.

• Revenues climbed 21.8% year-over-year to 10,292.4 million yuan, or $1.54 billion, topping market expectations of $1.43 billion.
• Adjusted loss of $326 million was more than sixfold higher than the year-ago quarter.
• Net loss came in at 20 cents per share, missing the consensus estimate of a loss of 17 cents per share.

Why it matters: NIO has been experiencing several issues this year, including a shortage of semiconductors and covid-19 restrictions in China.

The company has witnessed a marked easing of growth in vehicle deliveries in recent quarters. NIO had delivered 10,331 vehicles during the fiscal second quarter of 2020, with the figure more than doubling to 21,896 by the second quarter of fiscal 2021. The deliveries have ranged between 24,000 and 26,000 since the third quarter of fiscal 2021.

NIO said it had delivered 25,059 vehicles during the latest quarter, which represented a 14.4% year-over-year surge, but down around 3% from the first quarter of 2022. The recent deliveries included 9,914 ES6s, 6,749 ET7s 4,715 EC6s and 3,681 ES8s.

The company closed the quarter with cash and equivalents worth $8.1 billion.

“With the teams’ concerted efforts, our deliveries started to recover and achieved 10,052 and 10,677 units in July and August, respectively,” CEO William Bin Li said during the earnings call. “We witnessed a robust order inflow for the ES7 and started its deliveries at scale in August. We also look forward to starting the mass production and delivery of the ET5 in late September,” he added.

For the third quarter, management guided revenues between $1.92 billion and $2.03 billion, compared to market expectations of $2.32 billion. The company also projected deliveries of between 31,000 and 33,000 vehicles in the third quarter.

How shares responded: NIO’s shares gained 2.2% to close at $17.48 on Wednesday, after recording losses earlier in the session. The stock has lost around 3% over the past six months.

What to watch: Traders will closely monitor NIO’s growth plans, with the company looking to scale its new product line and deliver a significantly higher number of vehicles in the ongoing quarter.

The markets today

European stocks will be in focus today ahead of the European Central Bank’s interest rate decision

Context: Markets in Europe closed mostly lower on Wednesday amid rising inflationary pressures. Despite this, some markets settled on a positive note.

Details: Investors have continued to monitor aggressive monetary policies from global central banks. The ECB is all set to announce its policy decision on Thursday. The ongoing energy crisis in Europe has dampened overall market sentiment.

Investors also assessed economic data from China, which showed the country’s exports growing by 7.1% year-over-year in August, following 18% growth in the previous month. The country’s trade surplus fell to a three-month low of $79.39 billion in August.

Economic data from the Eurozone showed the economy growing 0.8% in the second quarter, up from the 0.6% expansion reported in the second estimate. Industrial production in Germany slipped 0.3% in July, after 0.8% growth in the previous month.

The pan-European Stoxx 600 fell 0.57% to close at 412.01 on Wednesday, with oil and gas stocks leading the plunge. Utility stocks bucked the overall market trend, gaining around 2% in the session.

The British pound fell to its weakest level versus the greenback since 1985 amid concerns around the UK’s economic outlook.

The FTSE 100 declined by 0.86% to close at 7,237.83 on Wednesday, while the DAX 40 and CAC 40 gained 0.35% and 0.02%, respectively, in the session.

What to watch: Traders will keep an eye on the ECB’s interest rate decision, which is to be followed by a speech from ECB President Christine Lagarde. The central bank is widely expected to hike increase rates by 75bps, after raising rates by 50bps at its previous meeting.

Other Markets: US indices closed higher on Wednesday, with the Dow Jones index, S&P 500 and Nasdaq 100 up by 1.40%, 1.83% and 2.07%, respectively.

Support & resistances for today

Market snapshot

What else to watch today

Denmark’s balance of trade and current account, France’s balance of trade and current account, the Central bank of Malaysia’s interest rate decision, the Czech Republic’s unemployment rate, South Africa’s consumer confidence, current account, manufacturing production and SACCI business confidence index, Ireland’s inflation rate, Israel’s Business confidence, consumer confidence, government budget value and tourist arrivals, Chile’s consumer price index, Mexico’s inflation rate, Nigeria’s balance of trade, Turkey’s gross foreign exchange reserves, US initial jobless claims, continuing jobless claims, natural gas stocks change, gasoline stocks, crude oil inventories, distillate stockpiles, consumer credit and Fed’s Powell speech, Colombia’s consumer confidence, India’s money supply M3, as well as Spain’s consumer confidence indicator.