Global markets were higher overnight, as US markets (S&P 500 Index, +1%) continued to rebound as investors assess better than expected earnings. So far 90 companies in the S&P 500 have reported earnings to date for the second quarter, and 78% reported above analyst expectations.
Technology stocks rose strongly, with the NASDAQ tech index up +1.4% on the back of a better-than-expected result from Tesla, and a weaker USD which translates to better earnings for tech stocks which make a significant portion of their earnings offshore.
It wasn’t all good news, AT&T (-7.6%) was down after lowering its full-year free cash flow guidance. Travel stocks were also down on weaker earnings or guidance: American Airlines (-7.4%), United Airlines (-10.2%), and Carnival (-11.2%).
US jobless claims also continued an upward trend 251,000 claims for the week, marking its third straight weekly gain and reaching its highest level since November 2021.
European Markets (Stoxx 600 Index, +0.3%) edged higher, with financials leading gains as ECB announced a 50-basis point rate hike, its first in 11 years.
Tesla (TSLA:NASDAQ)
Tesla shares rose +9.8% after their second quarter result was better than feared with earnings per share coming in at $2.27, well ahead of $1.81 that was expected by the market. Revenue for the quarter rose +42% from the same corresponding period last year, while automotive margins tightened due to inflation and increased competition for electric vehicles.
Tesla sold 75% of its bitcoin holdings believed to be around $28,000 each which would have been viewed favourably by the market. Tesla also provided upbeat guidance, as they expand manufacturing capacity quickly wanting to achieve 50% average annual growth in vehicle deliveries. We are currently HOLD rated on Tesla
Australia & New Zealand Market Movers
The Australian market (ASX 200 Index +0.5%) was up again yesterday.
Tech stocks led gains again as most sectors were up except for commodity-facing Energy and materials.
Zip Co surged +16.5%, as the beaten down buy now pay provider reported a +27% increase in revenue for the fourth quarter. Lithium miners were up strongly following a strong result from Tesla.
Woodside Energy fell -4.4% as it delivered a strong result which was expected. Revenue was up +44% on the prior quarter due to elevated oil prices and a one-month contribution from the BHP merger. Oil producer Santos fell -1.9% despite tripling its cashflow in the first half due to strong oil prices.
ANZ rose +1.3% which was a choppy first session since its trading halt was lifted as investors digest the Suncorp acquisition.
The New Zealand market (NZX 50 Index +0.6) was up yesterday on another upbeat day of trade.
Pacific Edge jumped another +5.3% yesterday after announcing Otago and Southland would begin using Cxbladder – meaning 75% of NZ’s health regions will have access to the tests via public healthcare.
3 Things Markets will be Watching this Week
- Major announcements this week include the European Central Bank rate decision and inflation data for the Eurozone, UK and Japan.
- US Corporate Earnings gets into full swing this week with Bank of America, Goldman Sachs, Johnson & Johnson, Netflix, Tesla, Twitter and American Express all scheduled to report.
- Locally, NZ Inflation (CPI) data and quarterly updates from Major Australian Miners and Energy companies.