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CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Market update: US stocks resilient despite Tesla’s China woes

US indices off to a slow start as Tesla stocks are down after Chinese vehicle discounts and US PPI, Treasury yields and the US dollar weigh on US stocks.

Source: Bloomberg

Tesla down after China vehicle repricing

Tesla announced it was cutting prices of its popular Model Y offering in the competitive Chinese market for electric vehicles. The move has been prompted by a tricky trading environment, as the Chinese economy faces a number of challenges to the highly anticipated economic rebound. Economic data since Q1 has placed the recovery in doubt.

The manufacturing sector continues to contract, exports and imports declined in July and according to the latest inflation report, deflation appears to be setting in. Tesla gapped lower at the start of trading but has attempted to bridge the gap since. The June swing low will be telling as it serves as a tripwire for potential continued selling.

Tesla daily chart

Source: TradingView

US PPI, Treasury yields and the dollar

Friday’s hotter than expected PPI print resulted in further rising US 10-year yields which supports the US dollar. Such a result typically weighs on indices as rising risk-free rates carry a more attractive yield and, as the name suggest, its as close to risk free as you can get. US 10-year yields approach levels last seen at the end of October – the highest since 2007/2008.

A lack of high importance US data this week leaves US indices looking for direction. One thing markets will get clarity on this week is the state of the US consumer, with US retail sales data and earnings updates from Target and Walmart.

The S&P 500 recently broke below trendline support – highlighting the potential for an extended pullback. The June 16th high at 4450 appears to have provided a level of support as price action now tests the trendline resistance (former support).

The MACD highlights the bearish momentum which remains in play, resulting in renewed interest in trendline resistance. If broken with momentum, 4450 is followed by 4325 on the downside. A move and close above trendline resistance highlights the yearly high of 4607.

S&P 500 daily chart

Source: TradingView

Nasdaq 100 breaks trendline support

The Nasdaq (E-Mini Futures) chart reveals a very similar charting posture, although, only on Friday witnessed a break of trendline support. 14,853 is the tripwire for bearish momentum with 14,251 coming into focus thereafter. Tech stocks however, have been resilient in 2023 despite interest rates rising above 5%. As such, the outlook remains in favor of the uptrend. 15,260 is the immediate level of resistance followed by 15,710 and 16,062.

Nasdaq 100 daily chart

Source: TradingView

This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.


This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
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