Wall Street set to open lower as trade concerns spoil sentiment

• Indices from Wall Street set to launch new week in red due to trade concerns

• Workers’ strike at General Motors (GM.US) enters fourth week

• General Electric (GE.US) plans to freeze pension plan

Markets remain anxious following reports that China is considering pursuing a narrower trade deal with the United States. Such a deal would not include commitments concerning, for example, Chinese industrial policy reforms. The question remains whether the US would agree to such a limited agreement. Top trade negotiators from China will arrive in Washington on Thursday and the next round of talks will begin. Until then we can expect Wall Street indices to be exposed to any trade headlines.

Source: xStation5

US100 index (NASDAQ futures underlying) bounced off the support zone at 38.2% Fibo level of July-August slump in the previous week. Subsequent recovery brought the price back above lows from end-September at 7700 pts handle. However, continuation of the upward move was halted at the resistance zone ranging 7760-7775 pts. The index tested this hurdle during today’s pre-market trading but failed to break above. Having said that, the potential trading range seems to be limited by 7700 pts handle from the downside and the 7760 pts handle from the upside. A break higher would pave the way towards the swing level at 7840 pts. On the other hand, failure to uphold the upward momentum and break below the lower limit of the range could hint at decline towards the latest local low at 50% Fibo level (orange circle, 7630 pts).

General Motors (GM.US) slumped around 10% since the workers’ strike began. Share price broke below the upward sloping trendline in the previous week but found bottom at $34.50 handle. However, lack of progress in talks hints that the company may remain under pressure. It is estimated that during the past three weeks GM suffered a loss of $1 billion or more. In case bears’ dominance prevails, the next support could be localized at $33.50 handle. Source: xStation5

Company News

Workers strike at General Motors (GM.US) enters the fourth week and there are barely any signs of ending it. Representatives of the United Auto Workers Union said that management of GM failed to provide a fresh proposal and instead they once again proposed terms that the Union has already rejected. Talks did not break down but such a development does not hint at any breakthrough occuring anytime soon. GM is one of the worst performing stocks on Wall Street in the pre-session trading on Monday.

General Electric (GE.US) announced a plan aimed at reducing its pension plan deficit. The plan includes freezing the plan for around 20 thousand of current employees with salaried benefits. The company will offer a lump-sum buyout to retirees that have not begun to collect benefits yet. The actions are said to reduce company’s pension deficit by up to $8 billion and net debt by as much as $6 billion. Investors seem to like this announcement as GE is trading higher in the pre-market.

Uber (UBER.US) received an upgrade at Citi. The Bank raised recommendation for the stock to “buy” and maintained a price target of $45/share. Analysts for the bank recognized various risks for the company, including California Assembly Bill , but said that focus on these issues may be masking Uber’s profit levers.

General Electric (GE.US) took a dive of around 30% at the turn of July and August.The subsequent recovery was halted slightly below the 61.8% retracement of the aforementioned decline. The stock pulled back once again after a few days of struggling in between 50% and 61.8% Fibo level. The latest local low at $8.40 is the first support level to watch and in case it fails to fend off the bears, the swing level at $7.80 could come into play. The combination of 33-period exponential moving average (green line, H4 interval) and 38.2% Fibo is the nearest resistance. Source: xStation5