US equities extended a bounce on Tuesday, while shares in Tesla surged in after-hours trading after Elon Musk said the company will accelerate more affordable models.
United States
Shares in Tesla climbed as much as 10% in after-hours despite reporting worse-than-expected earnings per share, with investors likely reacting positively to Elon Musk stating the company plans to start production on cheaper cars before the second half of 2025. Adjusted earnings per share came in at $0.45 for the first quarter compared to expectations of $0.52 while revenue declined -9% over the year to $21.3 billion, also missing estimates of $22.3 billion.
The S&P500 rose 1.2% along with the Dow Jones 0.69%, Nasdaq Composite 1.59% and Russell 2000 1.79% with the VIX retreating -7.38% to 15.69. Short-dated bond yields fell after the latest PMI reports were softer-than-forecast, suggesting the recent paring back of rate cut expectations may have been premature. For the month of April, the composite measure came in at 50.9, only modestly in expansionary territory and well below estimates of 52. PMI reports are generally a forward-looking indicator, although remains to be seen if this translates into hard data used by the central bank to determine monetary policy.
US Composite PMI (MoM)
Europe
European equities were also higher, driven by strong earnings reports from Navartis AG and SAP SE. The Euro Stoxx 600 climbed 1.09% along with the DAX 1.55%, CAC 0.81% and FTSE100 0.26%. Shares in SAP SE jumped 5.27% after reporting an increase in sales growth following demand for artificial intelligence. In economic data, the Eurozone PMI reports for April were mixed, with services coming in better than expected at 52.9 vs 51.8 while manufacturing was softer at 45.6 compared to 46.5 forecast.
Eurozone PMI (MoM)
Australia
The ASX is expected to rise this morning with ASX200 futures up 27 points or 0.35% to 7,725. The index gained 0.45% on Tuesday in mixed performance, with only 58% of stocks rising as gains were driven by financials 1.1% and health care 1.22%. Pallet provider Brambles was a notable underperformer, down -6.33% after it’s latest earnings update, which highlighted inflationary pressures are weighing on labour and transport costs, likely weighing on future sales. Lifestyle Communities was also a laggard, down -13.54% after updating lower home settlements for fiscal 2024 than previously expected.
In focus for investors today is the official inflation data for Q1. Expectations are for headline prices to have risen 3.4% over the year, with the trimmed mean moderating to 3.8% over the year from 4.2% at the end of 2023.
Commodities
Oil prices rose overnight with both WTI and Brent crude up 1.78% and 1.70% respectively to US$83.36 and US$88.48 a barrel. Iron ore futures in Singapore are rebounding this morning by 1.39% after falling -2.84% on Tuesday while copper is -0.93% lower. Gold is modestly weaker by -0.23% to US$2,322 an oz, while silver rose 0.41% after heavy losses on Monday.
Economic Calendar
Australian Inflation (YoY Q1) 11:30
German Ifo Business Climate (MoM Apr) 18:00
US Durable Goods Order (MoM Mar) 22:30
This article was written by James Woods, Portfolio Manager, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
