US stocks little changed ahead of cash open; Tesla receives Chinese factory boost

Summary:

• US indices trade around Friday’s closing levels

• US100 looking more positive above 6410

• Tesla called to open higher after upbeat China news

After an impressive rally to end last week. US indices are trading little changed on the day as traders turn their attention to the forthcoming cash session. A distinct dovish shift from Jerome Powell, in which the Fed chair delivered his first real supportive words for stocks since their Q3, was the catalyst for this move higher and the day’s trade engulfed the previous 4 sessions in a bullish fashion. In doing so the US100 managed to move, and close, back above the 6410 level and this could be seen as positive with the market clearing a significant short term barrier. This level could now provide the first region of support on any dips, with 6150 the next level to look to below if the move fades. Having said that the path of least resistance in the near term now appears to be higher and the 50 day SMA around 6674 could be a possible target for longs.

The US100 is looking more constructive above 6410 and longs may have the 50 day SMA currently at 6674 in their sights. Source: xStation

One stock that is in the US100 and gathering some attention this afternoon is Tesla, with the automaker’s share price called to open higher by around 1.5% after it announced a breakthrough on a new factory in China. CEO Elon Musk and Shanghai Mayor Ying Yong celebrated earlier today after the electric car marker unveiled their first non-US factory. “China is becoming the global leader in electric vehicle adoption, and it is a market that is critical to Tesla’s mission to accelerate the world’s transition to sustainable energy, ” Musk said, according to a company statement coinciding with the ceremony for the Shanghai factory.

According to the company, the so-called Gigafactory in Shanghai “will allow Tesla to localize production of Model 3 and future models sold in China, with plans to eventually produce approximately 3,000 Model 3 vehicles per week in the initial phase and to ramp up to 500,000 vehicles per year when fully operational (subject to local factors including regulatory approval and supply chain constraints).”

Tesla has held up relatively well in the broader market rout in recent months and ended Friday around the middle of its recent range from 245-390 with a solid gain in the region of 5%. Source: xStation   

This week doesn’t contain too much on the economic data front that will likely have a big impact on US stocks with this afternoon’s ISM non-manufacturing PMI vying with Wednesday’s release of the FOMC minutes as the main event. The former is due out at 3PM GMT with a consensus forecast of 59.6 after 60.7 previously. Thursday's manufacturing equivalent disappointed badly with a reading of 54.1  against expectation of 57.7 and a prior print of 59.3. There is a new round of trade talks between the US and China which began today, but it is unlikely that we see any real tangible progress on this front anytime soon. Commerce Secretary Wilbur Ross has said during a tv interview on CNBC that US tariffs pressure China’s ability to create jobs to stave off social unrest in what appears to show that a sizable level of hostility between the two parties remain and doesn’t sound like a breakthrough is imminent.