Growth in China, Tesla in Mexico, Arconic acquisition talks – what moves markets


By Jeffrey Smith — China’s economy grew at its fastest pace in eight months in February, gaining momentum following the end of COVID-19-related lockdowns, according to new business surveys. Tesla is expected to confirm plans for a $5 billion factory in Mexico. Arconic is rising after reports of talks with private equity giant Apollo and perhaps others about a potential takeover. The pound weakens and the euro rises after conflicting reports from leading central bankers, and oil is off a one-week high following fresh signs of weaker US demand. Here’s what you need to know in the financial markets on Wednesday, March 1.

1. Chinese Assets, Metals Rise as Chinese PMIs Show Reopening; ISM PMI due

The economy rose 1% after key business surveys showed China’s economy grew at its fastest pace in eight months in February.

Both the purchasing managers’ indices and the manufacturing purchasing managers’ index rose significantly from January to well above the 50 level, which usually indicates growth. The official manufacturing PMI, which largely tracks larger state-owned companies, reached its highest level in more than a decade.

The news boosted industrial metal prices, which rose by 1-2%.

The figures came on the same day that the US Institute for Supply Management releases its February figures, which are expected to show activity in the US slowing down, albeit less than in January.

2. Tesla will outline plans for the first Mexican factory

Tesla (NASDAQ:) will unveil plans for its first plant in Mexico as part of a major Investor Day presentation.

Mexico’s leftist president Andrés Manuel López Obrador said at a news conference Tuesday that the two sides had settled their differences over the company’s plans for a factory in northern Mexico’s Monterrey that revolved around Tesla’s heavy use of water. in a region that does not have that. much of the stuff.

Analysts expect investment volume to be around $5 billion. The burden on Tesla will be eased (again) by subsidies from the US federal government, this time under the Inflation Reduction Act, the provisions of which extend to the US’s southern neighbor.

Elsewhere in the auto industry, shares of Rivian (NASDAQ:) fell more than 9% in premarket after the EV maker suffered another major loss and fell short of expectations for fourth-quarter sales. Meanwhile, General Motors (NYSE:) will reportedly cut an additional 500 executive jobs as part of its ongoing cost-cutting efforts.

3. Stocks open higher; Arconic peaks at buyout talk

US stock markets are expected to open slightly higher after falling lower on Tuesday in response to another set of generally weak US economic data.

By 6:30 a.m. ET, they were up 68 points or 0.2%, while they were up 0.3% and up 0.6%.

Tesla aside, stocks likely to be in the spotlight later include Monstrous drink (NASDAQ:), which fell short of expectations late Tuesday, and Arconic (NYSE:), which rallied Tuesday after The Wall Street Journal reported that it is in talks to sell itself to Apollo Global Management (NYSE:). The news adds to signs of a thawing in the M&A market, which froze late last year as banks struggled to service large amounts of unsold buyout debt.

4. Pound drops, euro firm like Bailey and Nagel send mixed messages about further interest rate hikes

It fell after Bank of England Governor Andrew Bailey appeared to downplay expectations of more aggressive increases later this year. As with the and some better-than-expected economic data early in the year – including strong data for January released earlier on Wednesday – have prompted a repricing of interest rate expectations for the pound sterling.

However, Bailey said in a speech that “nothing has been decided”, despite acknowledgment of ongoing problems with the tight labor market – and despite figures released Tuesday showing food prices rose more than 17% in January.

In Germany, Bundesbank chief Joachim Nagel was decidedly less nuanced. He said it would be a serious mistake to stop the cycle of rate hikes by the European Central Bank too early. Preliminary data showed that it was again above expectations in February, while the increase was less than expected.

5. Oil dips after another big rise in US inventories

Crude oil prices were generally lower, with another large build-up of US inventories prevailing over the supportive effect of China’s PMI data.

data late Tuesday showed another $6.2 million increase in US crude oil stocks last week, well above expectations and skewing the market into an upside surprise when the at 10:30 am ET.

Analysts noted that the Chinese reopening story, on the other hand, is largely priced in.

At 06:45 ET, they were down 0.9% to $76.33 a barrel, while they were down 0.6% to $82.91 a barrel.

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