Date Issued – 3rd October 2024

Preview

The global markets have seen significant movements, ranging from economic stimulus measures in China to challenges in the U.S. supply chain and Tesla’s announcement. Here is a comprehensive look at today’s top stories and what they mean for your portfolio. Let’s deep dive into them.

Tesla Misses Delivery Targets for Q3 2024

Tesla’s much-anticipated Q3 2024 delivery report fell slightly short of analyst expectations. The company delivered 462,890 vehicles, just under the 463,000 projected by Wall Street. Although this represents a 6% year-over-year increase, Tesla’s stock dropped by 3.3% following the news. Tesla also faces production challenges with its Cybertruck and growing vehicle inventory, adding about 7,000 vehicles this quarter to bring its excess stock to around 20,000. This marks the third-best quarter in Tesla’s history, but concerns over missed targets remain.

Tesla Inc (TSLA): 249.02

Investment Insight

Tesla’s shortfall suggests potential volatility in the stock, especially with ambitious Q4 targets still in play. Investors should remain vigilant and assess how upcoming results in Q4 might impact long-term prospects.

China’s Stimulus Sparks Market Optimism

China’s markets have rallied on news of a 3 trillion yuan fiscal stimulus package introduced by Xi Jinping’s government. The stimulus includes measures to recapitalize banks, provide consumer handouts, and refinance local governments. This has provided a much-needed boost to Chinese equities, particularly in financial and real estate sectors, which have been underperforming for months.

However, while investor sentiment has improved, analysts are cautious about how sustainable this rally will be. The stimulus is seen as a vital step toward stabilizing China’s economy, but more measures may be necessary in the months ahead.

Investment Insight

China’s financial and consumer sectors could benefit in the near term, but longer-term sustainability remains uncertain. Consider selective exposure to Chinese equities with an eye on further economic developments.

Oil and Gold Markets See Continued Volatility

Oil prices have risen once again, fueled by ongoing geopolitical tensions in the Middle East. Israel’s military operations in Lebanon have raised fears of further disruptions to oil supplies from the Gulf region, pushing prices higher.

Meanwhile, gold prices have also climbed as investors turn to safe-haven assets amid global uncertainty. With inflationary concerns and geopolitical risks still in play, both oil and gold markets are expected to remain volatile in the near term.

Investment Insight

The energy sector continues to offer opportunities, especially for investors focusing on oil stocks and energy ETFs. Gold remains a reliable hedge against inflation and geopolitical instability, making it an important component of a diversified portfolio.

US Oil WTI (USOIL): 71.03

Gold (XAU): 2’643.00

U.S. Port Strike Disrupts Supply Chains

The strike at 36 major U.S. ports, now in its third day, is creating major disruptions across supply chains in North America. Key industries like retail, automotive, and agriculture are already feeling the pressure, particularly as the strike impacts perishable goods and critical manufacturing components.

With no resolution in sight, this labor action is poised to add inflationary pressure to the U.S. economy, especially as retailers prepare for the holiday season. Analysts warn that continued delays could result in higher prices for goods and further strain on supply chains.

Investment Insight

Sectors dependent on timely shipping, such as consumer retail and manufacturing, are particularly vulnerable. Diversifying exposure to companies with strong logistics management or less reliance on imports could help mitigate risk.

Yen Plummets to Two-Year Low

Japan’s yen took a significant hit after Prime Minister Shigeru Ishiba announced that the economy isn’t ready for another interest-rate hike. This has pushed the yen to its lowest level since 2022, raising concerns about inflation risks for import-dependent industries.

On the flip side, Japanese exporters are likely to benefit from the weakened currency, which could boost their competitiveness in international markets. However, inflationary pressures may offset these gains if the yen continues to decline.

Investment Insight

Japanese exporters stand to benefit from the yen’s weakness, offering potential opportunities in Japan’s manufacturing and technology sectors. Investors should also consider hedging strategies to mitigate currency risks.

USD/JPY: 146.60

Conclusion: Navigating a Dynamic Market

From Tesla’s delivery challenges to China’s stimulus measures and disruptions in U.S. supply chains, today’s developments underscore the complexity of the current market environment. Investors should stay agile, balancing risk and opportunity across sectors while keeping an eye on key geopolitical and economic factors.

As always, our team is here to help you navigate these events and make informed decisions. Please feel free to reach out for portfolio guidance or additional insights.

Upcoming Dates to Watch:

• October 23: Tesla’s Q3 earnings report.
• Mid-October: Potential resolution of the U.S. port strike.
• Late 2024: Further economic stimulus updates from China.

Find below some of our Buy/Sell Recommendations. Balfour Capital Group is a distinguished global boutique investment management firm with $400 million AUM and over 1000 Clients.

Disclaimer: This post provides financial insights for informational purposes only. It does not constitute financial advice or recommendations for investment decisions.