UK inflation and Tesla releases earnings
Oil => The commodity rises towards 83.00
EUR/GBP =>The pair falls to 0.8650
Tesla=> The stock rises to $220
Oil rises amid China worries & low inventory
Oil fell over 3% yesterday, the third straight day of losses, putting losses since Friday at around 7%. Recession fears have been hurting the demand outlook, overshadowing OPEC+ cutting production. Worries over the health of the Chinese economy intensified the selloff in oil on Tuesday. China, the world’s largest oil importer, announced that it would not be releasing Q3 GDP, retail sales of trade balance data this week and gave no explanation. This highly unusual move led the market to assume that China didn’t want any distractions for the 20th Communist National Congress, which is taking place this week. This could be interpreted that the data was expected to disappoint, which appears to be how the oil market viewed the move. Today oil is rising after lower-than-expected inventories in the US. EIA stockpiles are due later today.
Where might oil price head to?
After running into resistance at 93.20, oil prices decline, falling below the 20 & 50 sma, finding support at 81.80. The fall below the moving averages, plus the bearish crossover on the MACD, raises the prospect of further downside. Could oil prices fall further? If oil took out support at 81.80, the October low at 79.00 could come into focus ahead of 78.00, the September low. On the flip side, should buyers push the price higher, resistance could be seen at 84.30 the 20 sma ahead of 87.00 the 50 sma? It would take a move over 93.20 to create a higher high.
EUR/GBP looks to inflation data
EUR/GBP rose 0.4% in the previous session as investors tempered aggressive BoE rate hike bets and after German investor confidence unexpectedly improved. German ZEW economic sentiment rose in October, boosted by the announcement of gas & energy support. While the financial aid hasn’t yet been received, the prospect of it lifted spirits mildly. Today the pair is looking towards inflation from the eurozone and the UK. Eurozone inflation data is the second reading, so maybe less market moving than UK inflation data, which is expected to rise again back to 10.1% after slipping to 9.9%. Hotter-than-forecast inflation could pile pressure on each central bank to hike rates aggressively.
| Ger. ZEW economic sentiment | Actual: -59.2 (1.7) | Previous: -61.9 |
Tesla Q3 earnings preview
Tesla is due to report quarterly earnings. These come as the share price trades up around 8% so far this week, helped higher by upbeat results from Chinese EV maker BYD. The stronger-than-expected results have helped convince investors that Tesla’s results could also beat forecasts. Even so, year-over-year profit growth is still expected to decelerate amid a cooling economy that will likely hurt demand and ongoing supply chain issues. Tesla disappointed Wall Street with a record 343,000 deliveries in Q3. Wall Street is expecting revenue to rise 60% to $22 billion, while EPS is expected to be $1.01, up 63.2% YoY
Support can be found at 204 (2022 low) and 181 (May ’21 low).
Resistance for the stock can be seen at 250 (20 sma) and 265 (August low).
