By Vivek Kumar
Moving Markets Today: Global Stocks Buoyed by Tech Surge, Tesla Declines 6%, Oil Prices Climb; All Eyes on U.S. Q4 GDP, PCE Inflation, ECB Policy, and Intel Earnings
The S&P 500 hit its fourth consecutive record high with Netflix’s strong quarterly results and a boost in chipmakers’ performance led by ASML. Asian equities were mixed after China cut the bank reserve ratio, while oil prices rose due to a notable drop in U.S. crude stocks. China expanded commercial property loan uses to address liquidity concerns. Tesla shares slipped nearly 6% following a warning of significantly lower 2024 sales. Investors are eagerly anticipating the U.S. fourth-quarter GDP release on Thursday and Friday’s personal consumption expenditure (PCE) data. Intel’s upcoming earnings announcement after the U.S. market closes will be closely watched, with a focus on the chipmaker’s foundry business and recent processor sales. Here are five key takeaways for your day.
Tesla Shares Slide Nearly 6% Following Caution on 2024 Sales Outlook
Tesla expects a notable drop in electric vehicle sales growth this year compared to 2023, along with slower revenue growth and a reduced gross margin in the last quarter of the previous year. This led to a nearly 6% decline in the stock during extended trading. The U.S. automaker reported a 3% revenue increase to $25.2 billion, its slowest growth in over three years, falling short of the $25.6 billion analysts expected. Despite achieving its 2023 goal of delivering 1.8 million cars, Tesla projects around 2.2 million vehicle sales for 2024—a 20% increase, significantly lower than the promised 50% annual growth rate from three years ago. Tesla did not provide a specific delivery target for 2024.
China Broadens Commercial Property Loan Applications to Address Liquidity Concerns
China has unveiled measures to ease the financial strain on struggling real estate firms by expanding the scope of commercial property lending by banks. Simultaneously, the People’s Bank of China (PBOC), on Wednesday, has made a significant move to inject around $140 billion into the banking system. This substantial cut in bank reserves, the largest in two years, is set to commence on February 5th. The PBOC’s actions are seen as a robust signal of support for the fragile economy and the declining stock markets.
Oil Prices Soar as U.S. Crude Stocks Experience Notable Drawdown
Oil prices rose as U.S. crude stockpiles fell more than anticipated, coupled with the Chinese central bank’s reserve ratio cut signalling potential stimulus measures. Brent crude for March increased by 0.3%, reaching $80.24 per barrel, and U.S. West Texas Intermediate climbed by 0.3%, reaching $75.31 per barrel.
What’s Coming Up
The European Central Bank is expected to maintain interest rates unchanged on Thursday, and investors are closely watching Christine Lagarde’s press conference for clues on future rate movements. U.S. investors await this week’s GDP data to gauge interest rate trends, while the euro weakens ahead of the European Central Bank’s policy meeting. Economists predict a 2% annualized growth in U.S. GDP for Q4, and key data includes the personal consumption expenditure (PCE) data on Friday. Notable U.S. companies like Visa, Intel, T-Mobile, Comcast, Union Pacific, and Blackstone are set to release earnings reports today.
Asian Equities Mixed; China Stock Rebound Hits a Pause
The S&P 500 rose 0.08% to 4,868.55 points, but more stocks declined than advanced with a 2.5-to-one ratio. The Nasdaq increased 0.36% to 15,481.92 points, while the Dow Jones Industrial Average fell 0.26% to 37,806.39 points. Fuelled by optimism, Microsoft hit a record high, surpassing a $3 trillion market value for the first time. In Asian markets, caution prevailed as investors awaited details on China’s stimulus plans and the European Central Bank meeting. Hong Kong’s Hang Seng index rose by 0.4%, China’s CSI 300 gained 0.3%, Japan’s Topix fell by 0.2%, South Korea’s Kospi dropped 0.5%, and Japan’s Nikkei 225 declined by 0.3%. Yields on 10-year Treasuries rose after positive U.S. data, and the dollar index rebounded by 0.06%. Spot gold decreased by 0.7% to $2,014.56 per ounce, marking its toughest session in a week.
