Tesla shares will start trading down after the company admitted that it will probably not be able to meet its delivery targets this year. In the US, the FRB Philadelphia manufacturing survey will be released, along with data on jobless claims and existing home sales, and at least 3 Federal Reserve governors will speak in the afternoon. Bond market weakness continues to weigh on stocks despite Wednesday night’s decent earnings reports. The UK is sliding into a political farce, dragging down the bond market, and oil prices are rising on the back of an unexpected drop in US inventories. Here’s what you need to know about the financial market on Thursday, October 20.

1. TESLA SHARES FALL AFTER SUPPLY TARGETS CUT

Tesla will start trading down nearly 6% after the electric car maker lowered its delivery forecast for the year, unable to shrug off the effects of soaring production costs and scaling problems at its plants in Texas and Germany.

The forecast overshadowed a sharp rise in profit to $3.2 billion in the third quarter, made possible by customers’ willingness to put up with higher costs. It also overshadowed CEO Ilon Musk’s hint that the company could buy back up to $10 billion worth of shares next year.

Tesla shares hit a 16-month low last week, driven by both general market weakness and more specific concerns that Musk may be forced to sell a large portion of his stake to fund the acquisition of Twitter.

2. DATA ON JOBLESS CLAIMS, EXISTING HOME SALES AND THE PHILADELPHIA FRB SURVEY WILL BE RELEASED

A flurry of economic data is expected in the US, with weekly jobless claims and the FRB Philadelphia business survey at 08:30 ET (12:30 GMT), followed by existing home sales data for September at 10:00 ET (14:00 GMT).

The FRB Philadelphia survey will probably be the only one capable of delivering a surprise. Home sales are already entrenched in a downtrend due to rising prices and mortgage costs, and jobless claims have failed to react strongly to signs of a slowdown in certain areas of the economy.

Following the data release, a number of Fed officials will speak: |Patrick Harker of Philadelphia at 12:00 pm ET, followed by Governors Philip Jefferson, Lisa Cook and Michelle Bowman in the afternoon.

3. U.S. STOCK MARKET TO OPEN LOWER AMID WEAKNESS IN BOND MARKET; PM RAISED OFFER FOR SWEDISH MATCH

U.S. stock indexes are set to continue losses that began Wednesday at the open of trading today, with a fresh sell-off in the bond market reversing much of the sentiment boost from an earnings reporting season that has so far been better than expected.

On Wednesday, the 10-year Treasury yield hit its highest level since the 2008 financial crisis and continued to rise overnight, rising 2 basis points to 4.15%.

By 06:15 ET, the Dow Jones futures were unchanged, the S&P 500 futures were down 0.3% and the Nasdaq 100 futures, usually more sensitive to changes in the bond market, were down 0.6%.


Shares of AT&T, after another quarterly rise in mobile subscribers, and Philip Morris, which increased its Swedish Match offering and bought the rights to sell IQOS heated tobacco products in the U.S. from Altria, will be in focus Thursday. European telecom stocks Ericsson and Nokia also drew attention for a number of reasons, posting weak quarterly reports.

4. POLITICAL CHAOS IN THE UK PUTS PRESSURE ON BONDS

Political chaos in the UK continued, pushing down the pound and the country’s government bonds. The move was boosted by a report in Bloomberg that the Bank of England’s cost of recovering losses on its government bond portfolio will rise as the Bank begins “quantitative tightening.”

10-year bond yields rose back above 4% before retreating after banks showed only weak interest in the Bank of England’s repo operation, designed to maintain fragile market confidence.

On Wednesday, the government lost another top minister, Home Secretary Suella Braverman, a hardline immigration advocate who resigned in an apparent attempt to force the resignation of Prime Minister Liz Truss as divisions among lawmakers in the Conservative Party create a growing sense of paralysis in the government.

5. OIL RISES IN PRICE AFTER U.S. INVENTORIES FALL

Crude oil prices rose the previous day, still supported by an unexpected drop in U.S. crude inventories last week that was confirmed Wednesday by the country’s Energy Information Administration. Doubts about the ability of further releases from the U.S. Strategic Petroleum Reserve to change the underlying market dynamics also quickly supported prices.

By 06:35 ET, WTI futures had gained 1.9% to $86.12 a barrel, while Brent futures rose 1.5% to $93.81 a barrel.

In Europe, the costs of the burgeoning energy crisis reappeared in reports that gas importer Uniper may need another 40 billion euros ($39 billion) of support from the German government, while Germany’s producer price inflation index fell nearly 50% year-over-year, mainly due to a 250% increase in gas and electricity prices.