Equities report: US stock markets begin 2023 in the reds

US stock markets closed in the reds in their first trading day of 2023 pressured by a stronger dollar and intensified recession concerns. Later today, the release of the Fed’s December meeting minutes is expected to capture the market’s attention and Friday’s employment data is considered as a key defining factor for the future outlook of the US equities sector. In this report we aim to present the recent fundamental and economic news releases that impacted the US stock markets, look ahead at the upcoming events that could affect their performance and conclude with a technical analysis.

Tesla slumps after target miss

Tesla, Inc. (#TSLA) the electric car manufacturer, plummeted in the first trading day of 2023, leading the S&P500 as the biggest loser. Tesla’s share price was down by more than -15% but it managed to pare off some losses and closed the day -12% down. The automaker according to reports missed expectations of its fourth quarter delivery targets, citing ongoing issues in logistics. Despite the miss however, the automaker’s deliveries throughout 2022 rose by a staggering 40%. Furthermore, the company continues to struggle with weaker demand for its electric vehicles in both China and the US. More recently, the company offered discounts and other incentives in order to boost car sales, to counter diminishing interest, however the demand outlook remains uncertain. The lack of sales, particularly in China, stems not only from a slack in demand, due to deteriorating economic conditions but also due to fierce competition from other rival electric vehicle makers, such as Toyota. Adding more salt to injury, analysts from top brokerages downgraded their price targets to reflect the ongoing problems, placing more pressure on its share price. Despite the grim outlook and the disappoint news, some players see beyond the temporary shortfalls and indulge in a shopping spree, adding more Tesla stock to their positions and dragging their average position costs down. Such players include, Ark Investment’s CEO and founder Cathy Wood, who bought the dip and picked up 25k Tesla shares. According to Bloomberg data, the CEO loaded up on cheap Tesla shares once again in back in December, betting that US sales could cover the slowdown in demand from Chinese consumers.

Alibaba boosted as regulators approve capital expansion

Alibaba Group, Inc. (#BABA) the e-commerce giant, jumped by more than 7% in today’s early Asian session as Chinese regulators have approved a financing plan for Ant Group Co., a close finance affiliate of Alibaba. The move sparked optimism across the Chinese online and internet-based sector and it is considered as a positive step towards relieving some of the excess pressure, Chinese authorities have been placing upon the internet sector for the past few years. According to reports the China Banking and Insurance Regulatory Commission (CBIRC) division gave the green light to Alibaba’s plans, which aim at raising capital equal to 10.5 billion Yuan, $1.5 billion in dollar terms, for the expansion its consumer unit. Overall, the easing stance from the Chinese regulators alongside the gradual reopening of the Chinese economy as whole, add strong foundations for a serious upside potential for Alibaba’s share price for 2023. Nevertheless, traders should apprehend the positive news with a grain of salt, as in a recent interview the head of IMF, Kristalina Georgieva stated her concerns in regards to growth projections for the Chinese economy for 2023. She noted that “For the first time in 40 years, China’s growth in 2022 is likely to be at or below global growth,” and she foresees that “for the next couple of months, it would be tough for China, and the impact on Chinese growth would be negative, the impact on the region will be negative, the impact on global growth will be negative”, pointing out that there are significant risks lying ahead.

تجزیه و تحلیل فنی

BABA 4HChart

• Support: 85.00 (S1), 80.00 (S2), 75.00 (S3)
• Resistance: 95.00 (R1), 100.00 (R2), 105.00 (R3)

Looking at #BABA 4-hour chart we observe the gap up formed in today’s Asian premarket session after the favorable news but the inability of Baba to capitalize on the spike of positive momentum. We hold bullish outlook bias for the future outlook of #BABA, given the spike. The RSI indicator below our 4-hour chart currently registers a value of 62 showcasing bullish sentiment in favor of the stock. Furthermore, break above the upper limit of the Bollinger Band also indicates bullish tendencies supporting our case. Should the bulls reign over, we may see the price rise and break above the 95.00 (R1) resistance level and move closer to the 100.00 (R2) resistance line. Should on the other hand, the bears take over we may see the price action breaking below the 85.00 (S1) support level and head lower towards the 80.00 (S2) support base.

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