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Tech market up due to AI, global morale improving

More US-China tensions due to TikTok ban

Market mood lifted by tech optimism, US-China tension, and global economic trends. Tesla’s stock surges 10% despite revenue miss.

Tesla’s Stock Rebounds Despite Revenue Miss

Tesla, the electric auto giant, experienced a notable 10% surge in its shares despite reporting a quarterly revenue miss. This anomaly in the market was influenced by several factors, including the overall positive sentiment towards tech stocks and anticipation surrounding upcoming earnings reports from other megacap companies like Meta Platforms.

The decline in Tesla’s revenue was attributed to a global price war and reduced demand for electric vehicles worldwide. Revenue per vehicle also saw a significant drop of 5% compared to the previous year. However, the stock’s surge following the report release highlighted investors’ optimism, possibly fueled by vague plans for introducing new low-cost models by 2025.

Meanwhile, Meta Platforms, benefiting from the AI boom, is expected to report its earnings after the market close, maintaining its upward trajectory despite the ongoing U.S.-China tech standoff. This tension escalated with the U.S. Senate’s vote in favor of banning TikTok if its Chinese owner fails to divest the app within a specified timeframe.

U.S.-China Relations and Market Response

As U.S. Secretary of State Antony Blinken visits China amid fragile relations, President Biden is set to sign a bill providing aid to Ukraine, further complicating diplomatic dynamics. The outcome of Blinken’s visit and Biden’s actions will likely influence investor sentiment regarding geopolitical tensions.

The recent slowdown in U.S. business activity in April, as indicated by S&P Global’s flash survey, was perceived positively by markets. This slowdown, coupled with easing price pressures and labor costs, may alleviate concerns about the Federal Reserve’s hawkish stance, contributing to rallies in Fed rate futures and Treasuries.

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Market Performance Across Regions

In Asia, Japan’s Nikkei outperformed with gains of over 2%, buoyed by a weak yen and a rallying tech sector. The yen’s depreciation, reaching 34-year lows against the dollar, raised speculation about potential intervention by Japan’s Ministry of Finance.

In Greater China, shares surged, with Hong Kong’s Hang Seng and the Hang Seng Tech Index both experiencing significant gains. Chinese AI company Sensetime Group’s shares notably surged following the release of its latest AI model.

In Europe, German business morale improved more than expected, reflected in the positive performance of European bourses. However, French luxury group Kering faced a setback, with shares plummeting due to projected declines in first-half operating profit.

Corporate Earnings and Economic Indicators

Corporate earnings reports continued to shape market sentiment, with companies like Boeing and Biogen posting results either exceeding or falling short of expectations. Additionally, updates from UBS Group AG regarding Swiss banking regulations and declines in Evotec SE and Volvo Car AB stocks added to the market landscape.

Attention also turned to economic indicators such as U.S. March durable goods orders, with a rise of 2.6% exceeding estimates. Market participants awaited further data releases, including US GDP and consumer sentiment figures, to gauge the trajectory of the economy and potential implications for Federal Reserve policy.

Market Outlook and Key Events

Looking ahead, investors remain focused on earnings updates from key companies like Meta Platforms and IBM, which will provide insight into the health of the tech sector. Central bank meetings in Japan and Turkey, along with economic data releases worldwide, will likely influence market movements in the coming days. Additionally, developments in U.S.-China relations and ongoing geopolitical tensions may continue to impact investor sentiment.

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