Retail investors switching to cash: Tesla under pressure
Stocks fell in choppy trading on Thursday as investors weighed several key earnings reports and kept an eye on the bond market, where Treasury yields continue to climb.
The benchmark 10-year Treasury yield reached a high of 4.239 per cent on Thursday, trading at levels not seen since 2008.
The rising Treasury yield environment is one reason that many strategists are sceptical the market can sustain a rally in the near term, even though the third-quarter earnings season has been better than expected so far.
The expectation is that earnings will be good enough to keep the market in a trading range, but not enough to send it back up to its recent highs.
And in the UK the economic crisis there has now become a political one , with the resignation of the prime minister after 6 weeks.
The Dow Jones Industrial Average slipped 91 points, or 0.3 per cent. The Nasdaq Composite shed 0.6 per cent, while the S&P 500 dropped 0.8 per cent. The Dow was nearly 400 points at session highs, but stocks faded as Treasury yields rose.
Several strong earnings reports limited losses for the market, with AT&T and IBM rising 7.8 per cent and 4.7 per cent, respectively, after beating estimates on the top and bottom lines for their most recent quarter.
On the downside, Tesla shares dropped more than 6 per cent after the electric vehicle maker said Wednesday evening it expects to miss its 2022 deliveries target. The company also posted a quarterly revenue that missed analyst expectations. Another concern for Tesla shareholders: is whether Musk will need to sell shares to finance his roughly $44 billion deal to buy Twitter. He’s already sold about $15.5 billion this year.
Across the sectors no real leadership once again.
Of note the short interest in U.S. energy stocks has risen to 3.9 per cent, the highest level since October 2020, according to S&P Global Market Intelligence. That means that 3.9 per cent of energy shares available for trading are being held by short sellers.
The selling pressure across the market appears to be coming from retail investors who are piling into cash, with nearly $140bn switched into retail money market funds so far in 2022. For retail investors for the first time in a long time. The yields on money market funds are now yielding close to 3 per cent and are attractive from a risk free perspective.
Currencies
One Australian dollar is flat compared to the US dollar yesterday, buying 62.78 US cents (Thu: 62.72 US cents), 55.92 Pence Sterling, 94.28 Yen and 64.17 Euro cents.
Commodities
Iron ore futures are pointing to a 1 per cent gain.
Gold lost $2.30 or 0.1 per cent to US$1632 an ounce.
Silver added $0.24 or 1.3 per cent to US$18.60 an ounce.
Copper gained $7.65 or 2.3 per cent to US$339.45 a pound.
Oil added $0.43 or 0.5 per cent to US$85.98 a barrel.
Futures
The SPI futures are pointing to a 0.4 per cent fall.
Figures around the globe
Across the Atlantic, European markets closed higher. Paris gained 0.8 per cent, Frankfurt added 0.2 per cent and London’s FTSE closed 0.3 per cent higher.
In Asian markets, Tokyo’s Nikkei lost 0.9 per cent, Hong Kong’s Hang Seng dropped 1.4 per cent and China’s Shanghai Composite lost 0.3 per cent.
Yesterday, the Australian sharemarket lost 1 per cent to close at 6731.
Ex-dividends
GQG Partners (ASX:GQG) is paying 2.0449 cents unfranked
Sandon Capital (ASX:SNC) is paying 2.75 cents fully franked
Dividends payable
Apiam Animal Health (ASX:AHX)
ARB Corp (ASX:ARB)
Capitol Health (ASX:CAJ)
Charter Hall Social Infrastructure REIT (ASX:CQE)
COG Financial Services (ASX:COG)
Eildon Capital Group (ASX:EDC)
Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.
Copyright 2022 – Finance News Network
Source: Finance News Network
