Stocks make soft start to the week; Bitcoin back below $8000

Summary:

• Equities begin the week on the back foot

• Tesla tumbles < 200 after analyst warning

• DE30: Infineon Technologies suspends Huawei shipments

• Bitcoin falls back below $8000

• Aussie jumps after elections  

A recurring theme in recent weeks for US stock markets looks set to play out once more this afternoon with the benchmarks called to open firmly lower. On most occasions of late this has provided a nice buying opportunity on the opening bell with the US sessions often seeing a recovery after beginning in the red. Having said that, after a further escalation on the trade front with Google barring Huawei from using its operating system update there is a sense that banking on a swift recovery after any period of weakness is becoming an increasingly risky strategy. A head and shoulders setup could be forming in the S&P500 with the neckline seen around the 2800 level. 2895 potential resistance.

While stocks in general have enjoyed a good 2019, it’s been a tough year so far for investors in Tesla with the market in a near constant decline. Price dropped sharply at the end of last week with Friday’s session alone seeing a near 8% decline and this afternoon the stock has fallen lower by more than 10% for the market to hit a 2-year low below the 200 mark. The recent weakness appears to be linked to a pretty damning overview from a Wedbush analyst who said they have “major concerns about the firm’s growth plan.  “With a code red situation at Tesla, Musk & Co. are expanding into insurance, robotaxis, and other sci-fi projects/endeavors when the company instead should be laser focused on shoring up core demand for Model 3 and simplifying its business model and expense structure in our opinion with headwinds abound,” Wedbush analyst Daniel Ives said in a note to investors.

Last week US President Donald Trump blacklisted Huawei as another step in the ongoing trade war with China. This has already led to some suspension of deliveries to the Chinese company. Google informed about such a decision several hours ago. In Europe, the Trump’s decision is also affecting businesses with the Infineon Technologies also suspending shipments to Huawei, as Nikkei reported. The German chipmaker has yet to respond to request for comment and its shares are trading almost 4% down on the day.

Last week began with a bang for the cryptocurrency markets, with large gains seen across the board and calls began to grow that the moves were just the beginning of another sustained rally similar to the one which occurred back in 2017. Bitcoin, which remains the clear market leader in the space, had more than doubled in value in just over a month and the parabolic nature of the rise was particularly noteworthy. However, any over enthusiasm has since been checked somewhat, with price running into resistance around the 8450 region - an area which also capped an advance last July.

The Australian dollar jumped almost 1% in early trading in Sydney after investors were digesting the elections’ outcome. The elections saw the current Liberal-National (L/NP) coalition being re-elected with a chance to secure a majority in the parliament. Having counted 76% of votes the ruling coalition has got 75 seats in the Australian parliament with 76 seats needed to win, however, the predictions clearly point to a win of the L/NP coalition. The elections’ result was a surprise for market participants, but from a markets’ point of view it is the best possible solution.