Tag Archives: economic performance

Business

Stock Futures Rise Ahead of Inflation Data

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U.S. stock futures climbed Wednesday ahead of U.S. inflation data, suggesting that the major indexes will resume this month’s rally.

Futures tied to the S&P 500 and the Dow Jones Industrial Average gained 0.3%. Contracts on the technology-heavy Nasdaq-100 also advanced 0.3%. Both the S&P 500 and the Dow closed lower on Tuesday after notching record highs earlier in the week.

Stocks have pushed higher this month, with the benchmark S&P 500 notching its eighth record close of the year on Monday. Investors are betting that President Biden’s $1.9 trillion stimulus package will help bolster the economy while vaccinations help reduce Covid-19 fatalities. Investor sentiment has also been buoyed by companies’ quarterly results that have largely proved to be better than expected.

“As long as earnings estimates are going up, stocks are going up,” said Andrew Slimmon, a managing director and portfolio manager at Morgan Stanley Investment Management. “The magnitude of the earnings beats we have seen are so great because earnings have been way underestimated.”

Ahead of the opening bell, ride-hailing firm Lyft rose over 12% after posting a narrower annual loss, suggesting the company is moving toward profitability. Rival Uber Technologies is among the companies scheduled to release its results after the market closes. Uber rose more than 6% premarket.

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Business

Tesla is in decline, SUVs are king, and more insights from the world’s largest electric-vehicle market

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Europe overtook China in 2020 to become the world’s largest market for electric vehicles, amid a pedal-to-the-metal push to increase EV adoption from governments and supercharged demand from consumers.

The registrations of new electric vehicles topped 1.33 million in the key European markets last year, compared with 1.25 million in China, according to a report based on public data by automotive analyst Matthias Schmidt.

The 18 markets include the European Union states — minus 13 countries in Central and Eastern Europe — as well as the U.K., Norway, Iceland, and Switzerland.

And growth will only continue, according to Schmidt, who publishes the European Electric Car Report. He projects that electric vehicles’ share of the European car market will rise from 12.4% in 2020 to 15.5% in 2021 — that is 1.91 million vehicles out of a total of 12.3 million, and an increase of 572,000 from 2020.

Key trends have emerged as Europe races to become the most important region for EVs, highlighted in the report that Schmidt shared with MarketWatch.

Among them are that the Renault Zoe is now the most popular electric vehicle in Europe, overtaking Tesla’s Model 3, which took the top spot in 2019. In fact, Tesla’s success in Europe has declined across the board over the last year, with the U.S. company delivering 97,791 cars across the continent in 2020, down from 109,467 in 2019.

Here’s what you should know:

SUVs are leading the growth

When you think of environmentally-friendly vehicles, sport-utility vehicles and crossovers probably don’t spring to mind. But this class is by far the most popular type of battery-electric vehicle in Europe, representing 27% of all registrations in 2020 and 29% in December alone.

Hyundai
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+0.42%
and Kia
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-1.22%
led the pack, making up 39% of battery-electric SUV and crossover volumes in 2020.

SUVs and crossovers are even more popular with hybrid buyers — accounting for 53% of plug-in hybrid electric-vehicle volumes last year.

Luxury buyers prefer hybrids

When it comes to hybrids, better is best. Premium brands made up 58% of all plug-in hybrid electric-vehicles in 2020.

Many of those cars were supplied by the German automotive giants: Volkswagen Group
VOW,
-0.40%,
which owns Audi and Porsche, Mercedes-Benz owner Daimler
DAI,
+0.46%,
and BMW
BMW,
-0.19%.

There is a coming wave from China

As Chinese car makers increase efforts to meet market demand at home and abroad, they are looking at Europe.

The volume of electric vehicles in Europe that were made by Chinese companies grew 1290% from 2019 to 2020, to 23,800 units. Much of that momentum came only recently — half of those cars arrived in the final three months of the year.

As Europeans scrambled to buy electric vehicles, the flow of cars from China also included Teslas. In December, 20% of all Tesla
TSLA,
+5.83%
models registered in Austria were manufactured in China.

Also read: Audi is betting on the luxury market in a new electric-vehicle venture with China’s oldest car maker

Government action is speeding up EV adoption

European car makers are being pushed to manufacture more electric vehicles by the threat of hundreds of millions of euros in fines from the European Union over binding emissions targets. 

Phased in through 2020, and continuing into 2021, the fleetwide average emission target for new cars must be 95 grams carbon dioxide per kilometer, which is around 4.1 liters of gasoline per 100 kilometers.

In the wake of the post-Brexit trading agreement, the U.K. government said that the country’s car makers face emissions targets “at least as ambitious” as in the EU.

EV adoption is being pushed on both sides of the market, with governments stimulating demand by providing generous incentives for buyers to trade in their gas guzzlers.

In Germany, buyers can save up to €9,000 ($10,940) on purchases of new electric vehicles. France offered incentives of up to €7,000 in 2020, but will trim that down to €6,000 in 2021. 

Regulation could hurt some bottom lines in the short-term

Volkswagen Group confirmed last week that it had not met the EU’s emissions targets for 2020, meaning that the company is on the hook for more than €100 million in fines.

Others could face the same fate, though rivals Daimler, BMW, Renault
RNO,
-0.58%,
and Peugeot (now part of Stellantis
STLA,
+1.05%
) all say they met their targets.

“Despite very ambitious efforts in electrification, it has not been possible to meet the set fleet target in full. But Volkswagen is clearly well on its way,” said Rebecca Harms, a member of the independent Volkswagen Sustainability Council.

“The key to success will be to give a greater role to smaller, efficient and affordable models in the electrification rollout.”

It is unclear how easy that will be in 2021. The COVID-19 pandemic contributed to the fewest passenger-car registrations in Europe since 1985 and, according to Schmidt, this allowed a number of car makers to meet emissions targets.

Also read: Car makers put the pedal to the metal on electric vehicles in 2020, with sales surging in one key region where Tesla lost market share

Tesla is losing dominance

Tesla comfortably topped the European EV charts in 2019. It delivered more than 109,000 vehicles that year, making up 31% of the region’s battery electric-vehicle market. 

But the tide turned in 2020, with Tesla dropping behind both the brands of Volkswagen Group, which had 24% market share, and the Renault–Nissan–Mitsubishi Alliance, with 19% market share. Last year, Tesla delivered nearly 98,000 vehicles and made up just 13% of the European market.

According to Schmidt, it was the introduction of emissions targets, and the specter of massive fines, that has accelerated European car makers’ battle against Tesla for dominance.

See also: Electric-car sales jump to record 54% market share in Norway in 2020 but Tesla loses top spot

“With 2021 getting even tougher — thanks to the phase-in year ending — Tesla will come under even more intense competition,” Schmidt said. “Come 2025 when the targets increase again, Tesla will certainly be playing against fully-fit opponents and will potentially struggle.”

However, Schmidt does note in his market outlook for 2021 that the opening of Tesla’s factory in Germany, expected to start production in the second half, is likely to double regional volumes next year.



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World

British Economy, Post Brexit and Pummeled by Covid, Is Worst in G-7

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The U.K.’s economy shrank more last year than any of the G-7, in what the Bank of England says will be the country’s biggest economic slump in more than 300 years.

What went wrong? Shutdowns caused greater pain for the U.K. than other members of the Group of Seven advanced economies in part because it is especially dependent on consumer spending, which evaporated amid one of Europe’s deadliest Covid-19 outbreaks. The economy was already weak after the four years of negotiations over Britain’s exit from the European Union, during which business investment sagged and households held back on spending.

This is the starting point for Britain’s new relationship with the EU, which began Jan. 1 with a loose free-trade agreement. Earlier this month, Prime Minister Boris Johnson announced another nationwide lockdown to fight a new, more-contagious variant of the coronavirus. That puts the U.K. economy on course to shrink again in the first quarter of the year, when businesses must also get to grips with new European trading arrangements.

Growth in the U.K. was already weak going into the pandemic because of feeble business investment, poor productivity and scant growth in incomes. Once the coronavirus set in, the British economy shrank by more than its peers in the G-7 in the first nine months of the year. Figures for the final quarter, due Feb. 12, are expected to show the economy contracted again.

The U.K. took a bigger hit because around 13% of its annual gross domestic product comes from spending on recreation and culture and in restaurants and hotels, a higher share than any other G-7 country. Businesses that depend on direct contact with consumers—bars and restaurants, sports events, hotels and theaters, cinemas and museums—were hobbled when social distancing became the norm and when the spread of the virus forced them to close. The current lockdown, in place through mid-February, closes schools and nonessential shops, and people have been told to leave home only if necessary.

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Business

China Overtakes U.S. as World’s Leading Destination for Foreign Direct Investment

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China overtook the U.S. as the world’s top destination for new foreign direct investment last year, as the Covid-19 pandemic amplifies an eastward shift in the center of gravity of the global economy.

New investments by overseas businesses into the U.S., which for decades held the No. 1 spot, fell 49% in 2020, according to U.N. figures released Sunday, as the country struggled to curb the spread of the new coronavirus and economic output slumped.

China, long ranked No. 2, saw direct investments by foreign companies climb 4%, the United Nations Conference on Trade and Development said. Beijing used strict lockdowns to largely contain Covid-19 after the disease first emerged in a central Chinese city, and China’s gross domestic product grew even as most other major economies contracted last year.

The 2020 investment numbers underline China’s move toward the center of a global economy long dominated by the U.S.—a shift accelerated during the pandemic as China has cemented its position as the world’s factory floor and expanded its share of global trade.

While China attracted more new inflows last year, the total stock of foreign investment in the U.S. remains much larger, reflecting the decades it has spent as the most attractive location for foreign businesses looking to expand outside their home markets.

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