Tesla Stock Surges as Tech Megacaps Rally Ahead of Australian Inflation Data

Tesla stock price surged in after-hours trading on Tuesday as tech megacaps fueled a Wall Street rally ahead of the release of Australian inflation data at 11:30am AEST on April 24, 2024. Despite disappointing first-quarter 2024 results, Tesla's stock line rose 13.3% after the company announced plans to accelerate the launch of more affordable vehicle models.

Tesla's Q1 revenue and adjusted earnings per share fell short of Wall Street's estimates, with revenue decreasing 9% year-over-year due to lower vehicle average selling prices and deliveries. The company's automotive gross margin, operating income, and net income also declined compared to the year-ago period. However, Tesla's promise of new models and upbeat earnings from some U.S. companies lifted sentiment in the Asian and European markets, with the tech sector rising 3.6% and 2.5% respectively.

The broader U.S. stock market today saw a mix of gains and losses, with the Nasdaq recording 22 new 52-week highs and 27 new lows. The focus now shifts to the upcoming release of the Personal Consumption Expenditures (PCE) index, the Federal Reserve's preferred inflation gauge, on Friday.

Why this matters: Tesla's stock surge and the broader tech rally highlight the market's focus on fundamentals and earnings, temporarily sidestepping geopolitical factors. The company's plans for more affordable models could help boost growth and competitiveness in the electric vehicle market.

Meanwhile, Australia's annual rate of inflation fell to 3.6 percent in the 12 months to the end of March, according to official figures published by the Australian Bureau of Statistics (ABS) on Wednesday. The consumer price index (CPI) rose by 1.0 percent in the first three months of 2024, with the most significant drivers being rising costs of education, health, housing, food and non-alcoholic beverages.

Innes Willox, Chief Executive of the national employer association Ai Group, warned that the acceleration in CPI over the First Quarter Financial of 2024 is a clear sign that Australia's inflationary pressures are far from over. Willox emphasized the need for continued restraint in price setting and wage negotiations, and called for the rejection of the ACTU's "reckless" claim for a 5% increase in minimum and award wages in favor of a more moderate and realistic outcome.

"The acceleration in CPI over the first quarter of 2024 is a clear sign that Australia's inflationary pressures are far from over," said Innes Willox, Chief Executive of the national employer association Ai Group. He noted that many advanced economies are facing difficulties taming the "last mile" of inflation, which appears especially challenging in Australia, with the high 1.0% quarterly growth in trimmed mean inflation showing that price increases are very broad-based.

Key Takeaways

• Tesla stock surged 13.3% on plans for more affordable models despite disappointing Q1 results.
• Broader US tech rally lifted sentiment in Asian and European markets, despite mixed market performance.
• Australia's annual inflation rate fell to 3.6% in March, but employer group warns of ongoing pressures.
• Ai Group CEO calls for restraint in price and wage setting to address persistent inflation.
• Investors now await release of US PCE inflation data, the Fed's preferred gauge, on Friday.