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Stock Futures Trade Lower; Tesla Posts Strong Earnings

Stock Futures Trade Lower; Tesla Posts Strong Earnings

Stock Market Today 

US and European futures are trading flat as markets are struggling to score more gains. The focus among investors is the sharp increase in the dollar index as the Fed members continue to beat the drum of hawkish monetary policy. Yesterday, we heard from the Fed President, Neel Kashkari, that the Fed is in no mood to pause the rates, and the only path of the least resistance is skewed to the upside. This influences the US yields. In addition to this, investors continue to pay attention to earnings as the numbers from Tesla are likely to influence the market’s price action. 

Asian Markets And Forex 

Asia’s stock markets went into a tailspin, and bond rates shot higher as investors fretted that rising inflation and aggressive monetary policy may cause the global economy to weaken much more.

Shares fell in value in Japan, Australia, and China, with the benchmark for Hong Kong’s stock market on track for its lowest closing since 2009.

Concerns over China’s sluggish economic development and an increase in the number of people infected with the Covid virus are adding to investors’ concerns as the country’s party holds its congress in Beijing. On Wednesday, an index of Chinese companies that are listed in the US fell more than 7%, bringing it to its lowest level in nine years. At the same time, the offshore yuan traded at a new record low.

As for the Japanese markets, the 10-year yield once again rose over the top limit of the central bank’s target range, which was set at 0.25%, which caused the central bank to announce unscheduled bond purchases in an effort to bring it back down.

The yen fluctuated at levels not seen since 1990 and stayed within a hair’s breadth of the significant milestone of 150 against the United States dollar, which added to the difficulty that policymakers faced. Because of this, traders are on high alert for the possibility of an intervention by the government to support the currency.

Earnings 

Tesla published its earnings for the third quarter, in which the firm said that it generated $3.3 billion in net income on sales of $21.4 billion, despite continued supply chain bottlenecks, manufacturing delays in China, and rising competition from the traditional auto sector. These factors all had a role in Tesla’s recent performance. This reflects year-over-year growth of 56 per cent when compared to the sales of $13.7 billion in the third quarter of 2021. The firm said that it generated a free cash flow of $8.9 billion at the end of the year.

The profits release follows closely on the heels of a production and delivery report seen as somewhat underwhelming. In the report, Tesla said that it had delivered 343,830 cars to customers over the course of the most recent three months. That was around 20,000 fewer cars than the 364,660 automobiles experts on Wall Street had anticipated the company would sell during the quarter.

Tesla recognised that the pressure it was under to produce as many cars as possible at the end of each quarter was causing a barrier that was making it difficult to keep track of deliveries. In a message to shareholders, the business said, we are approaching such huge delivery quantities in the last weeks of each quarter that transportation capacity is becoming costly and difficult to acquire.” Tesla said that there would be improved cost reductions as a consequence of a “smoother delivery speed.

According to Tesla, the company is experiencing headwinds due to the higher cost of raw materials and inefficiencies at its Berlin Gigafactory. Additionally, a stronger currency is affecting Tesla sales overseas, which is eating into the company’s earnings. In addition, Tesla reaffirmed the announcement that it would begin delivery of its Semi trucks in December, after keeping customers waiting for many years; Pepsi will be the company that will put the first electric heavy rigs to use.