Tesla Shares Slump 12%, Nasdaq hits Record Anyway

Equities

In the US, the S&P 500 extended its streak of record highs, bolstered by data indicating robust economic growth. The US grew by 3.3% y/y in the first quarter with growth for the full year coming in at 2.5%.

Tesla's stock value plummeted over 12% on Thursday following the company's forecast of significantly reduced sales growth for this year compared to 2023, erasing approximately $80 billion (£63 billion) from its market capitalization. Tesla indicated it is currently transitioning between significant growth phases and has plans to initiate the manufacturing of an affordable new car model in the latter half of the next year.

Elon Musk, the CEO, also cautioned investors about the potential dominance of Chinese car manufacturers over global automotive competitors unless protective trade measures are implemented.

Despite these challenges, the overall market sentiment remained positive, with the Nasdaq Composite also registering gains.

In the UK, the FTSE 100 index exhibited a flat performance, indicating a cautious approach from investors amidst global economic uncertainties. The FTSE 250, however, saw some positive movement, buoyed by individual stock performances, including Elementis, which experienced a notable jump after news of potential takeover interest.

Forex

The euro declined to a six-week low against the strengthening US dollar, influenced by the European Central Bank's decision to keep interest rates steady at 4%. This decision, coupled with ECB President Christine Lagarde's comments on economic risks, weighed on the euro. In contrast, the US dollar gained traction following data that suggested the US economy is growing well, challenging the Federal Reserve's stance on interest rates.

Further impacting currency markets, the yen showed volatility against the dollar following Japan's indications of potential rate hikes. The dollar index, which measures the greenback against a basket of major currencies, saw an uptick, reflecting the dollar's overall strength in the current economic climate.

Elsewhere

In commodities, oil prices surged to their highest since late November, influenced by geopolitical tensions in the Red Sea and robust US economic data. West Texas Intermediate crude futures and Brent crude both registered significant gains. In the bond market, US Treasury yields fell as investors responded to the economic growth data, with a notable decrease in the yield on benchmark 10-year Treasury notes.