Marketmind: Tesla pothole as ECB and GDP awaited
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[January 25, 2024] A
look at the day ahead in U.S. and global markets from Mike Dolan
Tesla, the first of the so-called 'Magnificent Seven' U.S. megacap
stocks to report fourth-quarter earnings, hit a another pothole
overnight even as investors parsed signs of an otherwise brightening
economic picture into the new year.
A packed diary of events on Thursday, including the first U.S. GDP
readout for Q4 and the European Central Bank's latest policy decision,
kept world markets buoyed. And China's beaten-down stocks rallied after
Wednesday's monetary easing there.
But as we hit the white heat of the U.S. corporate earnings season,
single stock moves are catching the eye.
Upbeat updates and outlooks over the past week from global chipmakers
ASML and TSMC bode well for Intel's report later on Thursday and
streaming giant Netflix jumped more than 10% to two-year highs on
Wednesday on blowout subscriber numbers.
But with a different story to tell on supply chain issues and
competition from China, electric vehicle behemoth Tesla's stock price
dropped another 8% overnight as it warned of a sharp slowdown in sales
this year.
Perhaps speaking to both the U.S. election race ahead and the
'geo-economic' tensions with China, Tesla boss Elon Musk said: "If there
are no trade barriers established, they (Chinese automakers) will pretty
much demolish most other car companies in the world."
Even as local markets bounced this week on official Chinese moves to
stabilise deteriorating economic and investor sentiment, reverberations
from the U.S.-China political rift and growing competition from the
world's second biggest economy were felt elsewhere on Wall St.
![](http://archives.lincolndailynews.com/2024/Jan/25/images/ads/current/lcdj_sda_LUAL_2023.png)
Apple's smartphone shipments in China shrank 2.1% in the final quarter
of 2023 from the same year-ago period, hurt by intensifying competition
from local rivals led by Huawei, data from research firm IDC showed.
Back in the macro markets and interest rate world, the ECB is expected
to keep policy on hold later after weeks of pushback by central bankers
against speculation of an early year easing.
Money markets, however, still see more than a 50% chance of an ECB cut
by April and 125 basis points of easing by yearend.
The euro was slightly higher against the dollar before the decision.
![](http://archives.lincolndailynews.com/2024/Jan/25/images/ads/current/charrons_bch_2022.png)
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![](../images/012524PIX/busine21.jpg)
The Tesla logo is seen on a car in Los Angeles, California, U.S.,
July 9, 2020. REUTERS/Lucy Nicholson/File Photo
![](http://archives.lincolndailynews.com/2015/May/02/images/ads/current/guzzardo_lda022609.png)
The Federal Reserve meets next week and is similarly expected to
hold the line - with a first cut still more than fully priced by May
1.
But it did peak interest overnight with a planned end to emergency
funding rates introduced around last year's regional bank crisis,
saying the funding lifeline created for banks last March would close
as scheduled this March.
The Fed will immediately raise the interest rate on new loans from
the Bank Term Funding Program for the remainder of its life,
effectively ending what had become a popular and profitable
arbitrage opportunity for U.S. lenders.
Due variously to surprisingly strong January business surveys, U.S.
crude oil prices back at 6-week highs and a poorly-received 5-year
note auction, Treasury yields crept higher on Wednesday. But they
calmed down again before Thursday's open.
Ahead of the Fed meeting next week, Treasury publishes its quarterly
refunding totals and schedules - a big bond market mover on the last
two releases.
The dollar index held steady. Wall St stock futures were marginally
higher near record highs.
Key diary items that may provide direction to U.S. markets later on
Tuesday:
* European Central Bank policy decision and press conference
* U.S. corporate earnings: Intel, Blackstone, Capital One, Visa,
Dow, Comcast, Union Pacific, Northrop Grumman, Weyerhauser, American
Airlines, Southwest Airlines, Marsh & McLennan, McCormick, Valero,
Nextera, Sherwin-Williams, Western Digital etc
* U.S. Q4 GDP and PCE estimates, Dec durable goods orders, Dec
wholesale/retail inventories, Dec new home sales, Dec international
trade, weekly jobless claims, Kansas City Fed Jan business survey,
Chicago Fed Dec activity index
* U.S. Treasury auctions 7-year notes, sells 4-week bills
(By Mike Dolan, editing by Christina Fincher, mike.dolan@thomsonreuters.com)
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