Oil price falls despite Middle East tensions; Tesla ‘to cut 10% of staff’; Goldman Sachs profits jump – as it happened (2024)

Time to wrap up… here are today’s main stories so far:

Major airlines have been forced to cancel and re-direct flights to Israel in the wake of Iran’s missile and drone attack on Saturday.

EasyJet has temporarily stopped flights to and from Tel Aviv until this Sunday, while Wizz Air has said it will resume on Tuesday after cancelling services from Saturday until Monday.

More here.

Back in the markets, the oil price is sliding further into the red.

Brent crude is now down 1.6% at $88.96 per barrel, as traders cling to hopes that tensions in the Middle East will not escalate further following Iran’s retaliatory strike on Israel last weekend.

Some senior names at Tesla have also left the company.

That include Andrew Baglino, Tesla’s senior vice president for powertrain and energy engineering. Baglino has posted that he made the difficult decision to leave yesterday – which suggests he’s chosen to quit, rather than seeing his role axed.

Baglino writes:

When I joined as a junior firmware / electrical engineer back in 2006, a future Tesla that produced the world’s top selling vehicle was well beyond my expected set of outcomes. A reminder to all of us to set higher expectations, I guess :)

Bloomberg’s Ed Ludlow reports that Rohan Patel, Tesla’s senior global director of public policy and business development, has also left.

Tesla’s plans to cut 10% of its workforce haven’t given its share price a lift.

Shares in Tesla have dropped by 3.5% in early trading to $165.05, down from $171.05 on Friday night.

That knocks $19bn off its market capitalisation so far today, down from $544bn to $525bn.

So far this year, Tesla has now lost a third of its value.

The US stock market has begun the new week with gains, as traders in New York shrug off Iran’s attack on Israel last weekend.

The Dow Jones industrial average has risen by 353 points, or 0.9%, to 38,336 points, recovering a lot of Friday’s fall.

The broader S&P 500 has gained 0.7%, and the tech-focused Nasdaq is up 0.6%.

Analysts at BNY Mellon say the markets are in a “risk on” mood, as the “worst-case fears about Iran and Israel have not materialized”, meaning investors are now unwinding hedges they took out last week.

As explained this morning, there’s relief in the markets that most of the missiles and drones fired by Iran towards Israel were shot down.

Hopes that tensions won’t escalate are rising, after the White House has warned Israel that the US will not participate in any retaliatory strikes on Iran.

Back in the City, the FTSE 100 share index has shrugged off its earlier losses.

The blue-chip share index is now up 5 points, or 0.07%, which pushes it back over the 8,000-point mark.

That means its less than 50 points away from the record high of 8,047 points, which could come back into play if market nervousness recedes….

The US retail sales report will “further support” the Federal Reserve’s stance that there is no rush to start lowering interest rates, reports Andrew Hunter, deputy chief US economist at Capital Economics.

Hunter told clients:

Although growth over the first quarter as a whole was hit by the weather-related weakness in January, the March gain leaves retail spending growth looking in better shape than the data previously implied.

And although overall real consumption growth still looks to have slowed from the 3.3% annualised gain seen in the fourth quarter of last year, it was still apparently more than 2.5% annualised. Alongside the recent resurgence in employment growth, the continued resilience of consumption is another reason to suspect the Fed will wait longer before starting to cut interest rates, which now we think won’t happen until September.

Today’s strong retail sales suggest the US economy is holding up well, which may deter the Federal Reserve from cutting interest rates soon.

The US dollar has strengthened since the better-than-expected US retail sales were announced, hitting its highest level since last November.

This has pushed the Japanese yen down to a new 34-year low, at 154.28 yen to the dollar, which will intensify the pressure on Tokyo to intervene and support its currency.

Just in: US retail sales were stronger than expected last month, as the American economy continues to show resilience.

Retail sales rose by 0.7% month-on-month in March, and were 4% higher than in March 2023, the US Census bureau reports.

Spending at nonstore retailers (ie online shops) was up 11.3% year-on-year, while takings at food services and drinking places were 6.5% higher than in March 2023.

General merchandise stores grew their sales by 5.7%, while miscellaneous store sales jumped 6.1%, suggesting that consumer spending remained robust.

But, sales at furniture and home furnishings shops fell 6.1% year-on-year; perhaps due to the drop in home sales towards the end of last year.

Goldman Sachs has beaten expectations by posting a 28% jump in profits for the first quarter of this year.

Goldman has reported it made net earnings of $4.13bn for the January-March quarter, up from $3.23.bn a year ago.

That lifted its earnings per share to $11.58, up almost a third from $8.79 in the first quarter of last year.

Goldman reported “strong performances” in earnings from investment banking fees, from its Fixed Income, Currency and Commodities arm, and from its Equities division.

Goldman CEO David Solomon says:

“Our first quarter results reflect the strength of our world-class and interconnected franchises and the earnings power of Goldman Sachs. We continue to execute on our strategy, focusing on our core strengths to serve our clients and deliver for our shareholders.”

Goldman’s investment bankers had a busier year, with fees up 32% to $2.08bn. This was driven by higher revenues from debt underwriting, to fund leveraged finance activity (using debt to buy assets).