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Research Market strategy
by Swissquote Analysts
Morning News

Elon Musk Says Tesla is Breaking Ground on Shanghai Gigafactory

Topic of the day

Tesla Inc. is set to break ground on its first gigafactory outside the U.S. "Looking forward to breaking ground on the @Tesla Shanghai Gigafactory today!" Chief Executive Elon Musk tweeted. "Aiming to finish initial construction this summer, start Model 3 production end of year & reach high volume production next year," Musk said in a follow-up tweet. Tesla bought the land for the factory outside Shanghai in October for $140 million. Tesla has said it intends to produce up to 500,000 cars a year at the 210-acre facility within a decade. Shanghai's government has said limited production at the plant could begin by the second half of 2019, CNBC reported last month. Tesla said it plans to start Model 3 deliveries to Chinese customers in March, Reuters reported, with a starting price around $72,000, even after a recent price cut. "Shanghai Giga production of Model 3/Y will serve greater China region," Musk tweeted Sunday. The China gigafactory could significantly reduce costs - from transpacific transit and tariffs - for Tesla in a booming local market for electric cars. Tesla's first gigafactory opened outside Reno, Nev., in 2016. A second gigafactory in Buffalo, N.Y., started producing photovoltaic modules in 2017. It also plans to build a gigafactory in Europe, possibly in Germany.

Swiss stocks

Steep price declines among index heavyweights left the SMI the loser among its major European peers Monday. Despite the numbers of gainers outweighing losers, the SMI slid about 0.8 percent to 8,536 points and thus lost almost half its Friday gains. The major culprits were defensive heavyweights Roche, Nestle and Novartis, which fell between 1.2 percent and 2.0 percent. Market participants pointed to the strong demand for these stocks during recent market turbulence, saying now that sentiment has improved, this demand has abated somewhat. Observers also attributed the pharma stocks’ losses to a tweet by US President Donald Trump at the weekend, in which he had once again made negative comments about pharmaceutical companies’ pricing policies. The SMI’s winner of the day, rising 1.5 percent, was the very cyclical Adecco, after worries of a global slowdown in growth had been partly allayed by Friday’s strong US labour market data. Swatch closed unchanged.

International markets

Europe

The Stoxx Europe 600 fell 0.1%, or 0.5 points to 342.88 as a recovery by tech stocks after last week's Apple warning failed to offset losses for tobacco, utility, financial and brewing stocks. Austria's AMS AG and Germany's Siltronic AG climbed 9.6% and 6.2% respectively as investors returned after dumping the sensor and semiconductor makers following Apple's cut to its revenue forecast.

United States

U.S. stocks jumped, boosted by rallying technology shares, as officials from Washington and Beijing kicked off their latest round of negotiations over trade policy. The Dow Jones Industrial Average rose 152 points, or 0.7%, to 23585, wiping out early declines. The S&P 500 jumped 1% and the Nasdaq Composite gained 1.4%. Investors are beginning the week with their focus on the U.S. and China's negotiations, something many hope will help bring the two countries closer to a resolution in their trade fight. The fact that policy makers in the U.S. and China have agreed to meet is a positive sign, said Felix Lam, a portfolio manager at BNP Paribas Asset Management. Still, the key question is whether the two countries will reach a trade deal, Mr. Lam said. A broad rally in shares of rapidly growing technology companies pushed major indexes higher Monday. Amazon.com, Netflix and Advanced Micro Devices jumped more than 3%, with Amazon's gains putting it on course to end the day as the largest publicly traded U.S. company.

Asia

In Asia, markets were generally higher, with the Nikkei leading the charge while other indexes made more modest gains. Mainland Chinese stocks were the exception however and edged lower.

Bonds

U.S. government bond prices fell as traders focused on the encouraging aspects of new service-sector data. The yield on the benchmark 10-year U.S. Treasury note settled at 2.684% compared with 2.661% Friday. Yields, which rise when bond prices fall, drifted lower in the overnight session but perked up after the release of the service-sector report and as U.S. stocks edged higher.

Analysis

JPM lowers Volvo to Neutral (Overweight)
Barclays lowers Moeller-Maersk to Underweight (Equalweight)
Bryan Garnier lowers the Carrefour target to 20,50 (22) EUR - Buy


Produced by MBI Martin Brückner Infosource GmbH & Co. KG on behalf of Swissquote. All news is acquired with journalistic accuracy. No liability is assumed for delays or errors.

 
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