Analysts at Morgan Stanley downgraded the auto sector in the US yesterday, citing a challenging market environment and intense competition, led by lower-cost manufacturers in China, in a climate of falling consumer demand. General Motors fell by 4.87%, and rival Ford dropped by 4.14%.
As if to illustrate the point, the Times newspaper revealed today that the production of electric cars in the UK, including hybrids, fell by almost 26% last month. Meanwhile Stellantis, down 1.99%, is said to be launching a Chinese-made EV in the UK that will sell for just under £16,000.
The other narrative that came undone yesterday was the rally in oil and energy stocks. As the prospect of production cuts and higher prices evaporated, Saudi Arabia is said to be dropping its crude target price in preparation for production increases. The S&P 500 energy sector fell by 1.9%. Halliburton fell 3.67%, Marathon Oil 3.05% and APA 3.04%. Brent crude is trading at $71.80, down by 2.21% this morning, and WTI is down by a similar amount at $68.10 per barrel.
China appears to be considering further economic stimulus measures, news that helped copper to rally by 0.75% in early European trade. Gold is flat on the day so far, while silver is up by 0.4% at $31.95 an ounce. Platinum is up 1%, testing near-term resistance around $1,001 per ounce. It all looks relatively quiet on the foreign exchanges, though there are gains for the Kiwi and Aussie dollars against the greenback. The Aussie is up 0.63% and the Kiwi by 0.39%, with both currencies buoyed by the China stimulus talk.
Semiconductor stocks could benefit from the upbeat earnings and guidance, like high-end memory chip maker Micron Technology, which leapt 14.79% after hours. Sector peer Intel added 1.53% after the close, on top of a 3.2% gain in the regular session. The stock is up by more than 13% over the last week, with a gap to fill at $28.69, versus the post-market close of $23.90. The SOXX ETF, which tracks the Philadelphia Stock Exchange Semiconductor Index, put on almost 2% in after-hours trading.
At an index level, equity markets were broadly flat across the US and Europe yesterday, though the export-led indices in Sweden and Switzerland each gained by 0.8%. However, things are more promising this morning, with CFDs on the Nasdaq 100 trading up 1.37% soon after the European open. The S&P 500 is up by 0.75%, the DAX and CAC by 1.2% each, the FTSE 100 by 0.58% and the Euro Stoxx 50 by 1.54%.
The macroeconomic calendar is full of US Federal Reserve speakers today, with six in total, including Fed chair Jerome Powell. European Central Bank president Christine Lagarde is also expected to speak today. In terms of economic data, there are initial jobless claims, durable goods and GDP reports from the US, plus business and consumer confidence data from Italy, and an interest rate decision from Mexico.
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