Tuesday preview: AB Foods, Tesla results in focus

(Sharecast News) - Tuesday sees the release of results from Primark owner Associated British Foods and US electric car maker Tesla, as well as the latest UK jobs data. Matt Britzman, senior equity analyst at Hargreaves Lansdown, said the key numbers for Tesla's Q1 results are largely already in, with delivery and deployment figures pointing to a step up in earnings from last year's depressed levels, "unless there's a genuine surprise in the report".

"Cash flow is one area to watch, but any weakness is more likely to reflect the timing of heavy investment than a sudden deterioration in underlying demand, so it's not a number to overreact to in isolation," he said.

"As ever, the spotlight will fall on Elon Musk's commentary - particularly on the unsupervised robotaxi rollout, which has expanded into new cities, but at a slower pace than many had hoped. That has raised questions about whether the vision-only approach to fully autonomous driving will be ready for a broader rollout in time for an upcoming Cybercab launch.

"Updates on energy deployments will also matter, with investors keen to understand whether the unusually weak quarter was simply a timing issue or a sign of a more structural slowdown in what has been a key growth engine."

Investors will also be eyeing the first Senate Confirmation hearing for Kevin Warsh, US President Donald's Trump's pick to the be the next chair of the Federal Reserve once Jerome Powell steps down next month.

Kathleen Brooks, research director at XTB, said: "This is a market moving event, and investors and traders will be eagerly watching to see what Warsh has to say about inflation and the direction of monetary policy. The focus will be whether Warsh is willing to look though the recent energy price shock and continue to support lower interest rates, which could boost US Treasuries and weigh further on yields, which fell sharply on Friday on news that the Strait of Hormuz was reopen.

"If Warsh sounds like he continues to support lower interest rates, a position favoured by the President, it could boost the short end of the US Treasury curve, although the long end may come under pressure, as the yield curve steepens.

"There is a risk that a dovish Warsh could spook financial markets if a potential Fed chair does not take the threat of inflation seriously. This could damage the future Fed's credibility. Warsh will need to walk a narrow path on Tuesday. On the one hand, he needs to show that he is attentive to upside inflation risks, on the other hand he may point to productivity gains as justification for future monetary policy easing.

"Warsh's comments this week could disrupt the view that he is a dove, which may set the stage for a volatile day for markets, especially Treasuries. The ideal outcome for markets would be commentary from Warsh about the potential for a lower terminal rate, while setting a high bar for rate cuts in the near term. If he can keep the door open to rate cuts while also hinting at future easing, then the market reaction could be limited, and he would also prove his communication skills."

Brooks noted that even if Warsh passes Tuesday's Committee hearing, a full Senate vote is required. The Republicans hold a narrow majority in the Senate, and a single defection could make it impossible for Warsh to take the reins when Powell steps down, she said.

On the macro front, the latest UK jobs data for February is due, along with US retail sales and pending home sales figures for March.

The UK unemployment rate is expected to have remained at 5.2% in the three months to February, while average earnings excluding bonuses are expected to have fallen to 3.5% from 3.8% in January.