Tesla’s first quarter earnings should reveal how previous price cuts impacted its industry-leading profit margins.. Photo / David Zalubowski, AP
Keeping you up to date with the latest market moves, in association with Investment firm Jarden.
International
US
Tesla has cut the prices of some of its Model Y and Model 3 vehicles in the US for the sixth time this year to boost demand amid intense competition among electric vehicle makers globally.
The latest cuts came ahead of Tesla’s first-quarter earnings, which will reveal how the previous reductions have impacted its industry-leading profit margins. Tesla shares fell 2.3 per cent in morning trading.
Morgan Stanley reported a 19.0 per cent fall in first-quarter 2023 profit with management citing a slowdown in deal-making, as investment banks struggle with a challenging environment for mergers and acquisitions.
Further to this, investment banking revenue decreased by 24.0 per cent. The bank’s wealth management business attracted US$110 billion in net new assets during the quarter, and revenue in the division climbed 11.0 per cent compared to the first-quarter of 2022.
Oilfield firm Baker Hughes reported a first-quarter profit of US$289 million, up 99.0 per cent when compared to the first-quarter profit figure of 2022.
Management remains optimistic on the outlook for energy services as spending on oil and gas becomes less sensitive to commodity price swings, with the development of liquefied natural gas projects being a contributing factor.
Baker Hughes has lowered its view of spending growth in North America drilling and completions for the year but anticipates double-digit spending growth by upstream oil and gas companies’ revenue growth for 2023.
Abbott Laboratories printed a first-quarter sales figure of US$9.8 billion, a decline from the previous comparable quarter of 18.0 per cent.
The largest contributor to this fall was Covid-19 testing sales falling from US$3.3 billion in the first-quarter of 2022 to US$730 million in the first-quarter of 2023, but the company projects Covid testing sales of around US$1.5 billion in 2023.
Abbott’s full-year guidance is for earnings of US$4.30 to US$4.50 a share. Shares in Abbott jumped 2.3 per cent in pre-market trading.
Rest of the World
Inflation in the United Kingdom remained in the double digits in March, at 10.1 per cent, being higher than expected and the highest in western Europe according to official data.
Prices for food and non-alcoholic drinks were 19.1 per cent higher over the previous consecutive period, the biggest increase since 1977, and the cost of milk and sugar rose by about 40.0 per cent.
Experts predict that inflation in the United Kingdom could last longer than in other countries due to its reliance on natural gas for heating and electricity.
ASML Holding, a major supplier of lithography machines to the global semiconductor industry, reported first-quarter earnings of €1.96 billion (US$2.14 billion).
The company’s CEO Peter Wennink said the demand still exceeded its capacity for this year and it had a backlog of over €38.9 billion, but the company was still seeing mixed signals on demand from different end-market segments.
ASML’s shares dropped by 2.7 per cent as management warned about “mixed signals” on demand in the chip-making industry.
For the second quarter of 2023, management expects net sales between €6.5 billion and €7.0 billion and a gross margin between 50.0 per cent and 51.0 per cent.
Commodities
Oil prices fell 1.4 per cent to a two-week low despite a sharp decline in crude inventories in the United States.
Brent futures fell 1.5 per cent to US$83.54 a barrel while U.S. West Texas Intermediate (WTI) crude fell 1.5 per cent to US$79.63, putting both WTI and Brent on track for their lowest closes since March 31. The drop in prices erases most of the gains since OPEC’s surprise oil output cut announcement on April 2.
The US Energy Information Administration reported a bigger-than-expected 4.6-million-barrel crude withdrawal last week, while gasoline inventories jumped unexpectedly on disappointing demand.
Australia
Star Entertainment Group has announced a significant decline in operating conditions, particularly at The Star Sydney and The Star Gold Coast, due to regulatory operating restrictions and weak consumer spending behaviour.
The group’s current earnings performance is at an unprecedented low level. As a result, the board and management implemented initiatives to reduce operating costs, including reducing around 500 FTE positions and cancelling short-term and other incentives.
The group is also undergoing a strategic review of The Star Sydney to maximise value for shareholders.
The proposed sale of the Sheraton Grand Mirage Resort Gold Coast is progressing, and the group is accelerating plans to refinance its existing debt funding arrangements.
The group intends to engage with the NSW and Queensland governments and regulator Austrac to improve its liquidity position and seek flexibility on payment terms in relation to penalties.
The share price fell 7.4 per cent following the trading update.
AMP’s 1Q23 net flows and assets under management (AUM) in wealth management were generally consistent with expectations, although Australian Wealth Management’s net flows were slightly worse than expected.
The loan book of AMP Bank grew only slightly, by A$150 million or 0.5 per cent, which was below expectations, and residential growth was slow in January and February but improved in March and April.
AMP indicated that it was actively managing its loan portfolio to maintain credit quality and margins, and its net interest margin (NIM) remained largely in line with the previous fiscal year.
New Zealand
Kiwifruit producer Seeka Limited has informed the market that early season kiwifruit volumes are significantly lower than expected due to a mild winter followed by severe weather events such as frost, cyclones, and hail, resulting in yields being well below expectations.
The company estimates the total volume for the year could be down by 20 per cent compared to the previous year.
Seeka has taken steps to reduce costs, slow down capital expenditure, and review its assets. The company will update the market on earnings when there is greater certainty about the current year’s financial outlook after the harvest is complete. Shares ended -0.7 per cent on closing.
Coming up today
Today, in Australia, events include the NAB Business Confidence for March, IRESS will hold its Investor Day, and earnings releases from Bank of Queensland, Brambles, Challenger, Redbubble, Rio Tinto, Santos, and ZIP Co.
In New Zealand, the Consumer Price Index for the first quarter for 2023 will be released by Stats New Zealand, along with Seeka hosting itts AGM.
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All market pricing and announcements are sourced from Refinitiv, NZX and ASX.
Serko shares tumbled nearly 8% after the firm disclosed an impairment.