Gold Pops On Soft USD, Tesla Hits New Record

Markets have cooled somewhat after yesterday’s tech-fuelled rally as European shares open in the red and US futures sit just the wrong side of flat. London stocks are being pulled down by losses in the financial and energy sectors. The stand out mover of the morning is Gold, up nearly 1.2% on the day as it continues its recovery from last week’s sell-off. It is being helped by continued USD weakness and as real rates get pushed down, investors seek out an inflation hedge. The red line on the chart below shows the 50-day moving average on gold, which has provided support on a number of occasions over the last 6 months.

Yesterday, where tech stocks climbed across the board, Tesla (TSLA) stood out with an 11.2% gain that took its market cap to $342bn and made CEO Elon Musk the world’s fourth richest person. Tesla stock is now up 125% over the past three months and more than 300% year-to-date. Once again it was an upgraded analyst rating that sent Tesla stock higher; Wedbush’s Daniel Ives increased his 12-month price target on the stock from $1,800 to $1,900, citing accelerating demand for electric vehicles in China.

There were further developments in the continued US-China tensions on Monday, as the US Commerce Department issued new rules limiting access to Chinese telecoms firm Huawei Technologies access to chips made with US technology. President Trump again claimed that Huawei equipment could be used to spy on Americans, something Huawei vehemently denies. Some US chipmakers, such as Qualcomm  – which fell 1.4% on Monday – have been lobbying to ease restrictions amid concerns that Huawei will be driven to foreign competitors.

Nasdaq Composite continues to add gains

Of the three major US stock indices, the Nasdaq Composite was the winner on Monday, adding 1% to take its year-to-date gain to 24%. The S&P 500 was also in the green, but the Dow Jones Industrial Average fell 0.3%, dragged lower by 2% plus losses from names, including finance giants JPMorgan and Goldman Sachs, plus Boeing and others. It was a bad day for travel and airline stocks all round, with American Airlines, United Airlines and Alaska Air Group sinking 5.3%, 4.9% and 3.8% respectively. The sell-off appeared to be prompted by a number of states reporting that the Covid-19 situations had worsened over the past week, even as the number of new daily cases nationwide slowed. To-date, the US case count has topped five million, with more than 170,000 deaths. United Airlines stock has rallied 43% over the past three months, driven by a partial recovery in travelers numbers.

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