- Global markets react to Donald Trump’s live address
- Oil reclaims $100 as uncertainty kicks in
- Tesla has a low bar heading into deliveries print
- SpaceX IPO rumours build
- Eli Lily secures approval for weight loss pill
Matt Britzman, senior equity analyst, Hargreaves Lansdown:
Global markets took a step backwards overnight after Donald Trump’s live address, with the mood shifting sharply from the cautious optimism that had been building in recent days. From a market perspective at least, the speech appeared to have the opposite effect investors were hoping for, with oil pushing higher, bond yields climbing, and equity markets falling back. Rather than offering any fresh clues on a path toward de-escalation, Trump largely repeated a familiar set of talking points that traders have already digested across social media in recent weeks.
The result is a classic risk-off move across asset classes as hopes for further progress toward de-escalation gave way to renewed uncertainty. The FTSE 100 has opened lower, US futures suggest an unwind of yesterday’s optimism, and rate hike expectations are back on the rise. For investors, this is another reminder of how sentiment can shift quickly, and of how hard it is to time entry and exit points. Being diversified and sticking to a longer-term plan is a much more sensible strategy.
Oil markets are higher once more, with Brent and Crude now back above $100, as traders began pricing in the growing risk of disruption to energy infrastructure across the Gulf, amid lingering uncertainty around key shipping routes like the Strait of Hormuz. Comments suggesting military operations in the region could extend for several more weeks have dampened hopes of a near-term resolution, adding a fresh geopolitical risk premium to oil prices. That’s come despite a sizeable 5.5 million barrel build in US crude inventories last week, which would typically have weighed on prices but has instead been brushed aside in the current environment.
Tesla reports deliveries later today, with consensus expecting around 366k vehicles in the March quarter, and year-over-year comparisons are the key ones to watch. The tone heading into the print has turned more optimistic following encouraging registration data out of Europe, raising hopes for an upside surprise. Looking to the Model 3 & Y, anything that points to year-over-year demand holding broadly steady in the first full quarter since the removal of the US EV tax credit would likely be taken positively. Away from the vehicles themselves, Tesla’s energy storage business continues to gather momentum, with deployments expected to rise 38% year on year and now accounting for around 16% of total sales as utilities increasingly turn to battery solutions. Thinking beyond deliveries, Tesla needs to start showing more evidence of a ramping Robotaxi rollout to keep investors on side.
Sticking with Elon Musk, attention is building around a potential SpaceX IPO, which could be one of the largest listings in history and is already generating huge investor interest. Like many Elon Musk ventures, there are few directly listed peers to benchmark against, meaning the so-called Musk premium is likely to play a big role. Starlink at least offers something tangible to anchor part of the valuation, but expect plenty of volatility as markets wrestle with how to price the enormous risk and reward of large-scale commercial space exploration.”
The author holds shares in Tesla.
Derren Nathan, head of equity research, Hargreaves Lansdown:
“Eli Lilly’s weight-loss pill orfolglipron has been approved for prescription in the United States under the slightly more pronounceable trade name Fundayo. It will now go head-to-head with Novo Nordisk’s Wegovy pill, which has enjoyed the most successful launch of any drug in GLP 1 history. Clinical data suggest Wegovy may offer superior weight loss, but Fundayo boasts a lifestyle edge; it can be taken without meals, bypassing Wegovy’s required 30-minute fast.
So far, that’s not weighed on demand for Wegovy. But Eli Lilly’s already eroded Novo’s first-mover advantage in the injectables market, as reflected in the significant premium in Lilly’s shares. There’s scope for the value gap to close as the Danish firm raises its commercial game through subscription plans and key distribution partnerships, but there’s a lot of work to be done to restore investor confidence.”
