Day Ahead: Top 3 Things to Watch

Aug 01, 2018

Here’s a preview of the top 3 things that could rock markets tomorrow.

1. Tesla Climbs on Model 3 Guidance

Tesla (NASDAQ:TSLA) shares climbed about 5% in after-hours trading, despite the company posting a wider quarterly loss than expected.

The automaker said its lost $3.06 per share in the last quarter, compared with analysts’ expectations for a loss of $2.78 per share. But revenue of $4 billion was about in line with forecasts.

And investors were also encouraged by the company’s guidance on production.

Tesla said it will boost Model 3 production to 6,000 per week by late August and move 50,000 to 55,000 Model 3s off the line in the third quarter.

That should help the company on the way to its goal to be profitable in the next two quarters.

2. Jobless Claims and Factory Orders Data Due

Employment data continues to arrive Thursday as the market moves toward the release of the big July jobs report on Friday.

Initial jobless claims come out at 8:30 AM ET (12:30 GMT). Economists forecast that claims for first-time unemployment benefits came in at 221,000 last week, up from 217,000. A slight rise in continuing claims is also expected.

Looking ahead, the market is looking for the Labor Department to report a drop in nonfarm payrolls and for a tick down in the jobless rate.

Also Thursday, the latest numbers on factory orders arrive. The consensus is for a 0.7% rise in orders for June, compared with a 0.4% rise the month before.

3. BoE Wraps Up Central Bank Week With Hike Expected

Volatile moves in currency markets is expected to continue Thursday as the last of the three big central bank meetings this week wrap up.

It’s widely anticipated that the Bank of England’s Money Policy Committee will raise rates by 25 basis points to 0.75%. The decision is expected at 7:00 AM ET (11:00 GMT).

As with all rate decisions where the actual move is not in doubt, any signals on future rates decision will be of greatest interest. That’s especially true with the U.K. as the uncertainty about a Brexit deal persists.

"The key thing to watch is what the Bank of England has to say on its next steps," ING said.

Brexit will probably limit the MPC to one hike this year, but the Committee is likely to raise rates sooner rather than later, it added.

"In an ideal world, we believe policymakers would like to hike rates again much sooner than markets are currently pricing (towards the end of 2019)," ING said.

The voting for a hike is likely to be unanimous, according to economists, although one dovish member could vote to keep rates steady. Bank of England Deputy Governor John Cunliffe said in mid-July there’s a case to make for caution -- or “stodginess” as he put it -- when it comes to rates, Reuters reported.