Marketmind: Trillion dollar Tesla | Reuters

A Tesla logo is seen at the Tesla Shanghai Gigafactory in Shanghai, China, January 7, 2019. REUTERS / Aly Song

LONDON, October 26 (Reuters) – A look at the day ahead from Sujata Rao

Apple, Amazon, Microsoft, Alphabet … and Tesla. We now have a trillion-dollar electric vehicle business whose 10% rise on Monday lifted Wall Street to new records – electric vehicles going mainstream may be encouraging news ahead of the environmental summit of the COP26.

The news was less encouraging from Facebook, which grapples with whistleblowers and declining popularity among young people. But a $ 50 billion buyback plan, unveiled after the market closed, may be enough to push stocks higher on Tuesday, especially if other tech titans Google, Microsoft and Twitter also release bullish numbers.

Overall, the world stock index is approaching the records reached in early September. US equity futures pointing north for Tuesday and Japanese markets rose 1.8%. In Europe, a surprise 9% profit increase at UBS – its highest level in six years – could see the Pan-European Banking Index recover further beyond the April 2019 highs (.SX7P).

But the supply chain growls, container congestion and potato chip shortages plaguing businesses around the world show no signs of disappearing anytime soon.

Just take automaker Hyundai, which missed its profit estimates and predicted production-hampering chip shortages would take a long time to correct. And French auto parts maker Faurecia saw sales drop 10% in the third quarter, as semiconductor shortages forced customers to cut production.

Then there is the prospect of a tightening of central bank policy, with the Bank of England looking set to join the rate hike club next month.

All of this translates into slower economic growth and profits, Citi believes. This could see analysts on the buy side go into net “downgrade” mode on stock recommendations for the first time since the start of the pandemic, he added.

And don’t forget China, where another Modern Land developer failed to post a bond due Monday. Shanghai and Hong Kong stocks fell, despite gains from electric vehicle companies.

Key developments that should give more direction to the markets on Tuesday:

-Philadelphia Fed’s Non-Manufacturing Business Outlook Survey

-Monthly US Home Prices August / Consumer Confidence October / New Home Sales September

-American 2-year banknote auction

-Results in Europe: Norsk Hydro posts a record Q3; Reckitt Benckiser Boosts Full Year F’cast After Upbeat Third Quarter Read More; Logitech sales increase thanks to telecommuting boom

– -American results: 3M, Corning, Eli Lilly, General Electric, Hasbro, Invesco, JetBlue, Lockheed Martin, S&P Global, United Parcel Service, Xerox, Google, Microsoft, Texas Instruments, Twitter, Visa

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Reporting by Sujata Rao; edited by Karin Strohecker

Our Standards: The Thomson Reuters Trust Principles.

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