Risk-off equities due to hawkish Fed while oil rallies

TL;DR: Markets took a risk-off turn yesterday, with equities falling while commodities such as oil rallied. Asian shares are mixed this morning, US and European futures edge slightly higher in pre-market trading.

📰 What’s moving markets?

• US Stocks fell yesterday, led by tech stocks due to concerns over interest rate hikes after consistent hawkish commentary from the Fed. The S&P 500 fell by 0.5% and the Nasdaq 100 1.4%.

• Asian shares are mixed this morning with Japan’s Nikkei 225 down 0.5% and China’s Hang Seng index up 1.7%.

• Oil prices have rallied 0.50% over concerns that the disruption in Russia caused by the Wagner coup might adversely impact oil supply.

• Goldman Sachs increased Tesla’s valuation but downgrades their rating to neutral due to concerns that the stock might be overvalued as a result of the recent rally (more below).

• Aston Martin surges 9% and Lucid Motors rallies 13% after they reach an agreement for Luic to supply technology, including battery systems to Astin Martin, for cash and shares worth about $232 million. The deal would make Lucid a minority shareholder with a stake of about 3.7 percent.

📊 Chart of the day

Goldman Sachs downgraded Tesla stock to "Neutral" due to concerns about the automaker's valuation being too high after its recent rally. However, they are not bearish on the stock, and even increased the price target to $248 from $185 - the downgrade to “Neutral” was mainly a valuation call. Goldman Sachs also noted the challenging pricing environment for new vehicles that could continue to weigh on Tesla's automotive non-GAAP gross margin this year. The stock is up by 133% year-to-date, but still 22% below Sep-22 highs after dropping 1.58% yesterday. This is the third straight downgrade for Tesla: Morgan Stanley and Barclays downgraded the stock last week, citing the negative impact of increased competition in China and the challenging pricing environment for auto vehicles.

Tesla stock price (1yr return)

📅 Coming up this week

Monday 26th June

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Tuesday 27th June

• Japan BoJ Core CPI (YoY) expected: 3.4%, last; 3.0%

• Canada Headline CPI (YoY) expected: 4.2%, last: 4.4%

• Canada Core CPI (YoY) expected: 3.9%, last: 4.1%

• US Housing Price Index (YoY) expected: 3.1%, last: 3.6%

• Australia Headline CPI (YoY) expected: 6.1%, last: 6.8%

Wednesday 28th June

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Thursday 29th June

• Euro Zone Consumer Confidence expected: -16.1, last: -17.4

• Germany Headline CPI (YoY) expected: 6.3%, last: 6.1%

• US GDP (QoQ) expected: 1.4%, last: 1.3%

• Japan Unemployment Rate expected: 2.6%, last: 2.6%

Friday 30th June

• UK GDP (QoQ) expected: 0.1%, last: 0.1%

• Euro Zone Core CPI (YoY) expected: 5.5%, last: 5.3%

• Euro Zone Headline CPI (YoY) expected 5.7%, last 6.1%

• Canada GDP (MoM) expected: 0.2%, last: 0.0%

📈 The markets at a glance