Auto stocks are reeling as investors weigh commodities headwinds, geopolitical risks
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Automobile stocks traded lower on Thursday following the failed high-level talks between Russia and Ukraine aimed at finding a compromise. Ford (F
-2.0%), General Motors (GM
-2.3%), Toyota (TM
-0.8%), BMW (OTCPK:BMWYY
-5.5%), Stellantis (STLA
-7.2%), Mercedes-Benz Group AG (OTCPK:DDAIF
-3.5%), Ferrari (RACE
-3.0%), Tata Motors (TTM
-1.7%) and Tesla (TSLA
-5.3%) all fell.
Investors are faced with pricing in an extended period of high commodity prices and inflation. Volkswagen CEO Herbert Diess added to the anxiety by warning that the fallout of a lengthy war between Ukraine and Russia risks being very much worse for Europe's economy than the impact caused by the pandemic, which is still being felt in the supply chain.
On Wall Street, Piper Sandler kept an Overweight on Tesla (NASDAQ:TSLA), but warned that shareholders also need to factor in U.S-China relations as a wildcard.
"Nickel prices are garnering particular attention, given their importance in battery manufacturing, but in our view, deteriorating U.S.-China relations are potentially more consequential in the long-term. Teslaâs China exposure is a major positive, but we must admit: If American companies are eventually used as pawns in a wider geopolitical conflict, then Tesla shareholders would likely suffer."
Stellantis (NYSE:STLA) still has the highest Seeking Alpha Quant rating in the auto sector.