Tuesday preview: Tesla, BP, BoJ in focus

updated: 26 April 2021 at 12:35pm Author: Alexander Bueso

(Sharecast News) - The focus of Tuesday's session will be the latest quarterly updates from US technology giants Microsoft and Tesla.
In the case of the latter, which was due to publish its latest results after the close of trading on Monday (with Mr. Softee set to follow the next evening), analysts were looking to see if the manufacturer was any closer to turning a profit by selling cars, as opposed to selling regulatory credits.

Nevertheless, as Michael Hewson, chief market analyst at CMC Markets UK conceded, the firm did turn free cash flow positive in the last three months of 2020 - to the tune of $2.79bn.

Even so, Hewson said: "With a market cap in excess of the entire automotive sector, the shares have an almost cult like status amongst its devotees, however questions are now being asked as to whether this sort of valuation can be sustained at a time when the likes of GM, Ford and Daimler are starting to ramp up their electric vehicle offerings, and have the ability to scale much quicker."

Still in the corporate space, but in the UK this time, all eyes will be on BP's first quarter trading update.

Investors' attention will be, especially, on the oil giant's progress on transitioning towards renewable energies and as regards its deleveraging plans, with progress expected on both fronts, Hewson said - and perhaps already priced into its shares.

On the first of those fronts, BP's Lightsource business, for example, has continued expanding in Spain, acquiring responsibility for a 1.06GM portfolio in Spain from RIC Energy.

The outfit has also closed several deals recently to sell non-core assets.

So much so that its full-year target of reducing net debt from £38.9bn to £35bn could be reached in the first three months of 2021 alone, helped by its recent trading performance.

"This sets the bar high for a decent set of numbers given that it was also suggested that BP would look at restarting share buybacks, subject to maintaining its investment grade rating," Hewson added.

"The resilience of the oil price this quarter will no doubt have helped in terms of this week's numbers, however with gasoline and distillate demand in Q1 set to be weak due to lockdown restrictions, investors will be hoping for further indications of what other measures the company is looking to take to steer itself towards a greener future."

Yet as Hewson also pointed out to clients, the stock price had already run up by 15% since the release of its full-year numbers in February.

In the background, the spotlight will be on the result of the Bank of Japan's monetary policy meeting, with rate-setters in Tokyo expected to stick with an easing bias.

A first reading on South Korean GDP for the first quarter of 2021 is also due out overnight.

Stateside, the main risk event of the session will be the US Treasury's auction of seven-year debt.

On home shores, the Confederation of British Industry will release the results of its Distributive Trades survey for April.

Tuesday 27 April

INTERIMS

Egdon Resources, Focusrite

INTERNATIONAL ECONOMIC ANNOUNCEMENTS

Business Climate Indicator (EU) (10:00)

Consumer Confidence (US) (15:00)

GDP (Preliminary) (US) (13:30)

Housing Starts (US) (14:00)

Industrial Confidence (EU) (10:00)

FINALS

Anexo Group , Gaming Realms, Inspiration Healthcare Group , Nostrum Oil & Gas , Xaar, XLMedia

AGMS

Aquis Exchange , Maven Income and Growth VCT 5, OMV Petrom S.A. GDR (REG S), Travis Perkins, Tribal Group

TRADING ANNOUNCEMENTS

Vivo Energy

Q1

BP