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Risk-on prevails Wall Street amid strong US GDP, Tesla’s surge

bull markets

Wall Street finished higher amid a Tesla-fuelled tech rally and greater-than-expected US GDP. Tesla’s shares surged 10% after CEO Elon Musk upgraded the sales outlook to 2 million cars in 2023. The US Q4 GDP growth printed at 2.9% annually, higher than an estimated 2.6%, but slower than the third quarter of 3.2%. Notably, the US housing spending sharply declined by 26.7% and dragged down the GDP by 1.3%, which indicates that the Fed’s aggressive rate hikes have significantly pressed on the housing markets, along with weakened consumer spending. Despite an insistent tech rally, the economic outlook stays gloomy as the US GDP growth seems to lose momentum.

In Asia, the Australian markets closed for Australian Day on Thursday. Hong Kong stock markets jumped 2.37% on the return from the Luna New Year holiday. The Chinese EV makers spiked following Tesla’s rally, with BYD up 6%,  XPeng jumping 10.7% and NIO Inc surging 12.7%.  Futures also point to a higher open across the APAC region, with ASX futures up 0.34%, Nikkei 225 futures rising 0.33%, and Hang Seng Index rising 0.30%.

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  • Nasdaq rose 1.8% amid the broad tech rally. 9 out of the 11 sectors in the S&P 500 finished higher, with Energy leading gains, up 3.3%. Consumer Discretionary jumped 2% due to a surge in Tesla shares, while both Technology and Communication Services rose 1.6%.  
  • Tesla’s shares jumped 10% on Elon’s ambition of 2 million car sales in 2023. The EV maker has beaten estimates in both earnings per share and revenue in the fourth quarter, though the results showed a squeezed profit margin due to its aggressive incentives offering. CEO Elon expects car sales to hit 2 million this year following the price cuts.
  • Bed Bath & Beyond’s shares plunged 20% on the news that banks have determined it defaulted and have cut off its credit lines. The retailer has warned that it may have to file for bankruptcy in early January due to skyrocketing stockpiles and weakened demands.
  • Chinese shares jumped on the first day of return from the Luna New Year holiday. While the mainland stock exchange remained closed, Hong Kong stock markets rallied on Thursday, with Hang Seng Index up 2.37%, led by Chinese tech shares and EV stocks. Tesla CEO Elon Musk said a Chinese automaker is likely to be the closest competitor to Tesla.   
  • Gold futures slid as the US dollar strengthened and bond yields held up. From a technical perspective, the precious metal faces a potential pullback risk as a bearish divergence surfaces from an overbought territory in the RSI. The near-term support may see the 20-day moving average around 1,890.
  • Crude oil climbed higher following the Chinese markets’ return as China’s reopening continued to boost the demand outlook. The recent outage in the US refineries has also pushed up the price, while better-than-expected US GDP may have encouraged the commodity markets in general. 

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