The ASX is set to open fairly even today, as the markets take a wait-and-see approach to several data sets on the horizon – ASX futures were down 5 points or 0.07% to 7,372 early this morning.
In the US, investors are keen to see more quarterlies trickle in so they can assess the outlook, with the three main indices – the Dow (-0.2%), S&P (-0.01%) and the Nasdaq (0.03%) trending down or roughly even overnight.
Gold and copper were down in overnight trade, 0.61% and 0.44% respectively. West Texas oil was down as much as 2.35%, while Bitcoin gained 2.78% to $45,053.
Big guns, soft outlooks
Meta and Disney are planning to lay off thousands of employees each in the coming weeks. Tesla (NASDAQ:TSLA) had a shock when its quarterly failed to meet expectations and its share price dropped in after-market trading.
“Tesla’s stock price has risen by almost 70% so far in 2023 but it’s still 50% below the all-time high and despite the company meeting expectations on earnings per share, the price has already fallen around 3% in after-market trading,” said Stake ASX equities analyst Dylan Zhang.
“The EV maker is currently locked in a price war and following aggressive price cuts, has seen its margins fall from 19.21% in Q1 2022, to 11.4% in Q1 2023.
“Despite the lower prices helping to boost sales volumes, automotive revenues posted a slight decline in the last quarter, and increasing competition from producers like BYD and NIO means maintaining the company’s high margins will be a challenge.
"Tesla’s margins are still impressive when compared to traditional automakers like Ford and General Motors (NYSE:GM) but these firms can also source funds from other areas in the medium term.
“Yet despite the contraction in margins there are some reasons to stay bullish. Tesla’s latest report emphasises its potential to generate revenue through services including autonomous driving, supercharging and connectivity, rather than unit sales alone.
"Tesla is well ahead of the competition on data collection for full self-driving, with over 150 million miles to date, even if the technology is still years away.
“Turning to the ASX, continued softening EV demand suggests that lithium prices are unlikely to see a large turnaround in the near future, which could be a negative signal for miners.
"Producers that have already agreed long term offtake agreements, including Syrah Resources and Liontown Resources (ASX:LTR), will be better equipped to weather price pressures, but the outlook for early-stage explorers looks more challenging.”
These comments should be balanced with the raft of regulatory changes the government is contemplating for the electric vehicle market and infrastructure, which seem likely to make Australia a more welcoming environment for the technology in the near term.
RBA review findings due
Back home, there are big changes afoot for the Reserve Bank of Australia (RBA). A root-and-branch review of the RBA structure and governance commissioned by the Federal Government will result in sweeping reform for the central bank.
Treasurer Jim Chalmers is expected to announce the government’s in-principle support of the 51 recommendations made by the review today.
The review was tasked with examining the bank’s board composition, the way it communicates with the public, its decision-making processes and core objectives.
Its findings could not be delivered at a more challenging time for Lowe and co, coming at what we all hope is the tail end of a 10-rate-rise run, despite the governor’s famous last words that we would be unlikely to see interest rates rise until 2024.
The Treasurer is set to release the findings, provide an initial response on behalf of the government, and announce two new appointees to replace outgoing members.
One of the review proposals is the establishment of an independent Monetary Policy Board and Governance Board, in line with other central banks around the world.
"The review is all about ensuring Australia’s central bank and monetary policy arrangements are as strong and effective as they can be into the future," Chalmers has said.
"I thank the RBA review panel for this significant piece of work and look forward to working across the parliament and with the RBA to implement the recommendations."