The mood remains cautious on inflation and recession fears
Tesla => The stock tumbled 8% yesterday
GBP/JPY =>The pair rises
Gold => The commodity falls to $1840
Tesla drops 8%. Here’s why.
Tesla dropped 8% yesterday, putting losses for the year at 34%, underperforming the S&P’s 20% slide which put it into a bear market.
Tesla’s share price now trades at a level last seen in July 2021, wiping out all of its gains over the past year. The latest leg lower for Tesla comes from reports that the EV maker is raising the price of all its model. Musk doesn’t disclose the reason for the price hikes. However, with Tesla facing significant inflationary pressures with raw material prices, wages, and logistic costs all rising, then a price hike could be explained. Furthermore, Tesla could be trying to improve its margins.
Where next for Tesla share price?
Tesla has been trending lower since early April.
The price ran into resistance at $620 on May 24 before attempting a rebound higher. The move higher was short-lived, and the price is once again looking to retest the $620 low. The 50 sma has crossed below the 200 sma in a death cross bearish signal.
The RSI also supports further downside. Sellers need to break below 620 to extend the bearish trend towards $600 round number and $550 the May 21 low. On the upside, resistance can be seen at $700, it would take a move above $795 to create a higher high.
GBP/JPY rises post BoE, BoJ
GBP/JPY rose 0.18% yesterday following the BoE rate announcement.
The UK central bank raised interest rates as expected by 25 basis points, which takes the base rate to 1.25% its highest level in 13 years. The BoE also said that they could continue raising rates as inflation in the UK is set to rise to 11% in the coming months. Higher inflation and stalling growth raise the risk of a recession.
Today the pair is rising, up around 1% after the BoJ stuck with its dovish position. The central bank left rates unchanged whilst pledging to continue with its ultra-loose policy stance, hurting demand for the yen.
Gold falls ahead of Fed Powell’s speech
After two days of strong gains, Gold prices are falling.
The precious metal is on track to lose 1.5% across the week paring gains of 1% last week. Gold continues to trade at the will of the USD, which is firmer, tracing treasury yields higher, lifted by hawkish Fed bets. With the exception of the BoJ, central banks this week have been raising interest rates, which is bad news for non-yielding gold. The Fed hiked rates by 75 basis points.
Today’s attention will be on Eurozone inflation data and a speech by Fed Chair Powell. More hawkish commentary could lift the USD and pull gold lower.
| US jobless claims | Expected: 215k (14k) | Previous: 229k |
Support can be found at 1828 (June 1 low) and 1805 (June low).
Resistance for the pair can be seen at 1857 (yesterday’s high) and 1875 (50 sma)
