Tesla invests in the Chinese market, falling oil prices and Brazilian GDP in the 2nd quarter are among the topics
Wall Street stock futures point to a lower start to September trading after a volatile month of trading in August. Meanwhile, Democratic Party (D-N) Kamala Harris said she would try to block a proposed takeover of U.S. Steel by Japan’s Nippon Steel during a campaign stop in the battleground state of Pennsylvania.
Elsewhere, electric carmaker Tesla is planning a new six-seater version of its Model Y vehicle in China in a bid to boost its appeal in the lucrative auto market. In Brazil, expectations are on economic activity data and the fallout from the X (formerly Twitter) ban.
1. Kamala Harris
Democratic presidential candidate Kamala Harris has signaled she will block Japan’s Nippon Steel’s proposed $14.9 billion takeover of U.S. Steel. Speaking to a crowd of supporters in Pennsylvania, a battleground state in the 2024 U.S. presidential election, Harris called U.S. Steel a “historic American company” what “must remain American owned and operated by Americans”.
The comments are similar to objections previously raised by US President Joe Biden. Harris currently serves as Biden’s vice president.
Harris’ Republican rival Donald Trump has also spoken out against the deal, vowing to block it.
The bipartisan opposition to the deal echoed fierce opposition from the United Steelworkers union, which called on lawmakers to examine whether it would harm U.S. national security interests and U.S. Steel’s domestic workforce. U.S. Steel and Nippon Steel have continued to support the offer, saying it would benefit the U.S. steel industry.
US stock futures pointed lower on Tuesday (September 3, 2024), with Wall Street poised to kick off a new month of trading after a rollercoaster August.
As of 07:55 ET, Dow futures were down 0.49%, S&P 500 futures were down 0.47% and Nasdaq 100 futures were down 0.60%.
Major U.S. stock averages were closed Monday (September 2) for the Labor Day holiday. They closed Friday (August 30) higher, ending August in positive territory despite a sharp drop earlier in the month fueled in part by concerns about a possible U.S. recession. The benchmark S&P 500 index had fallen more than 7% but rebounded to rise 2.3% in August, its fourth straight month of gains. The 30-stock Dow Jones Industrial Average and the tech-heavy Nasdaq Composite also gained 1.8% and 0.7%, respectively, in the period.
2. Tesla in China
Tesla is set to produce a new six-seater version of its Model Y vehicle, expected to launch in China in late 2025, the company said. Reuters this Tuesday (3rd September).
The move is part of the company’s strategy to refresh its best-selling EV (Electric Vehicle) and boost the Model Y’s appeal amid growing competition from domestic EV makers in China.
Tesla has told the market it needs to prepare for a significant increase in Model Y production at its Shanghai factory, according to the report.
While specific details on how Tesla plans to increase production have not been released, the Shanghai factory is currently awaiting approval for an expansion onto an adjacent 70-hectare site of former farmland.
Tesla has already achieved a 6% year-on-year increase in domestic and international deliveries of the Model 3 in the first half of the year, following the introduction of an updated version last year. August was Tesla’s best month in China so far this year, with a 37% increase in sales compared to July in the world’s second-largest economy.
3. Prohibition of X
The Brazilian president Luiz Inácio Lula da Silva (PT) supported the STF (Supreme Federal Court) decision to maintain the ban on Elon Musk’s social media platform X. The left-wing leader told CNN Brazil that “The world is not obligated to tolerate Musk’s far-right ideology just because he is rich”.
On Monday (September 2), a panel of judges from Brazil’s highest court unanimously supported the ban on X. Supreme Court Justice Alexandre de Moraes ordered the shutdown over the weekend, saying the platform did not comply with hate speech regulations and other requirements.
Musk responded on X, saying Moraes was a “dictator”. Billionaire Bill Ackman also warned that the ban could make Brazil, South America’s largest economy, “not investable”.
Investors also expressed concern about Moraes’ separate decision to freeze Brazilian bank accounts belonging to Musk’s Starlink satellite broadband company. Moraes ordered the measure last week after X failed to pay fines imposed on it for failing to comply with court orders.
4. Oil Market
Oil prices traded lower on Tuesday (September 3) as investors digested slow economic growth in China, the world’s largest oil importer, as well as the disruption to production and exports from Libya.
At 07:56, the Brent contract fell 2.46% to $75.61 per barrel, while US crude futures (WTI) lost 1.85% to $72.19 per barrel, after the contract was not settled on Monday (2.Sep) due to the US Labor Day holiday.
China’s purchasing managers’ index hit a 6-month low in August, data released over the weekend showed, pointing to likely weakening demand from the world’s largest crude oil importer.
Oil exports from major ports in OPEC member Libya were halted on Monday (September 2). Output was reduced across the country, providing some support to oil prices.
5. Brazil’s GDP
Investors are awaiting GDP (Gross Domestic Product) data for the second quarter of this year, which will be released this Tuesday (September 3) by the IBGE (Brazilian Institute of Geography and Statistics). The consensus expectation is for growth of 0.9%, above the 0.8% recorded in the first quarter. The expectation is that household consumption and investment in gross fixed capital formation were the drivers, with robust activity even with the impacts of the floods in Rio Grande do Sul.
The positive outlook reflects high consumption, “driven by a buoyant labor market and real income growth, factors that support this robust pace of growth”according to Leonardo Costa, economist at ASA.
“This healthy composition is made possible by an environment with a tight labor market, real wage gains for workers and slightly easier credit conditions”Bank of America economists highlight in a note.
With a more robust economy in the first half of the year, the trend is for a slowdown in the second, according to Itaú. “For the second half of the year, we expect GDP to slow down to an average growth of 0.2% at the margin, given the lower fiscal and monetary stimulus. If our estimates are confirmed, growth for the year will be 2.5%.”.
At 7:57 am (Brasília time), the EWZ ETF was down 1.57% in pre-market trading.
With information from Investing Brazil.
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