Early Morning Call: recession fears dominate; metals downtrend; Tesla deliveries fall

Indices outlook

US indices closed last Friday’s session on a positive note, with the US Tech 100 ending a five-day losing streak. US markets are closed today for Independence Day, but indices remain open on IG's 24-hour markets.

In the Asia-Pacific region, trading was mixed. The Japan 225 and Australia 200 closed higher while the Hong Kong HS50 remained in negative territory.

Europe indices started the day higher. Germany recorded its first seasonally-adjusted trade deficit since the early 1990s. Eurozone producer price index is coming in at 10am. Economists see it rising 1.3% in June month-on-month (MoM), up 37.1% year-on-year (YoY).

The US Dollar Basket dropped back below 105 on Friday evening. Earlier in the day it climbed to a two-week high after inflation in the Eurozone hit a new record. Consumer price index (CPI) rose 8.6% in May YoY.

Two macroeconomic events could test the greenback this week: the Federal Open Market Committee (FOMC) minutes on Wednesday, and Friday's non-farm payrolls (NPP). Early polls show that economists expect 270,000 jobs were added in June, down from 390,000 in May. The unemployment rate should remain at 3.6%. Note that ADP said last week it would suspend the release of its private sector survey for approximately the next two months. ADP says it wants to revamp this survey and make it "a more robust, high frequency view of the labour market."

Equities

Tesla Inc reported on Saturday that it delivered 254,000 vehicles in the second quarter (Q2), while up 27% YoY, the Chinese shutdowns brought the company's first back-to-back quarterly drop in more than two years.

This figure was well below the 350,000 estimated by analysts, although some had already started cutting their expectations after CEO, Elon Musk, warned that it was likely to be roughly level with Q1 which came in at 310,000 deliveries.

Tesla is also facing a $440 million writedown on its bitcoin holdings after a slump in the digital currency's value. The carmaker bought $1.5 billion worth of bitcoin early last year in a radical move that made it the biggest company to move part of its cash reserves into cryptocurrency.

Commodities

Oil prices are down this morning, paring gains from the previous session.

If supplies remain tight, global recession fears weigh on energy and material sectors. Last Friday, the Baker Hughes total rig count fell by three to 750. It was all due to a drop in the number of gas rigs in operation, falling by four to 155. The number of working oil rigs rose by one to 595.

The Australian government announced overnight that it sees export revenues at its mining and energy sectors to climb 3% to a record $419 billion in the year to June 2023, buoyed by surging coal and gas prices.

Copper is hovering around $8,000, after recording its fourth straight week of declines. Since its record high set early in March, copper has dropped by nearly 27%.

Platinum is down again this morning, testing the new 20-month low set on Thursday.

Spot Silver (5000oz) is trading at near two-year lows.