US pre-open: Stocks seen muted ahead of trade talks; Tesla slumps
US stock futures pointed to a muted open on Wall Street on Thursday ahead of a key meeting between President Trump and Chinese Vice Premier Liu He, with Tesla set to slump following disappointing first-quarter delivery numbers.
At 1220 BST, Dow Jones Industrial Average futures were flat, while S&P 500 and Nasdaq futures were 0.1% weaker.
Sino-US trade relations were in the stoplight again, with Trump due to meet Liu He later in the day as trade talks between the two nations continue in Washington.
White House economic adviser Larry Kudlow said on Wednesday that Chinese and US negotiators were making "good progress" and although a deal has not yet been struck, the two parties are edging closer.
James Hughes, chief market analyst at Axi Trader, said the meeting could be a meaningful step forward in finding a compromise, although Wednesday's economic data from the US laid bare the impact that the global economic slowdown is having on the US economy.
"In turn this is nudging up the prospects of an earlier rate cut from the Fed - markets are now pricing in a 20% chance of a quarter point easing at the June meeting - but the accompanying optimism this should bring doesn’t seem to be flowing towards stocks just yet.
"Economic data is relatively thin on the ground today so this could limit the scope for fresh direction in the short term, although any positive news surrounding those high level meetings between China and the US could fuel some renewed confidence. Otherwise it’s a case of looking towards the weekend break for tomorrow’s non-farm payrolls and just as critically, the average wage growth print. This could be instrumental in determining just how quickly the Federal Reserve will be prepared to cut interest rates. "
On the corporate front, Tesla shares looked set to fall sharply at the open after the electric car maker said first-quarter vehicle deliveries slid 31% from the fourth quarter of 2018 to 63,000. Analysts had been pencilled in a figure of 76,000.
David Cheetham, chief market analyst at XTB, said the drop in deliveries was "significantly" worse than even the most pessimistic of analyst forecasts and comes at a time when the firm is aiming to ramp up production.
"The results could have been even worse for Tesla with only half of total deliveries for the quarter completed with just 10 days to go, but even with the late push final figures of 63,000 are well below the 90,700 seen in Q4 2018.
"The company still believe they can make up the shortfall, with a bounceback in the next quarter and they have reaffirmed their year-end guidance of 360,000-400,000 total deliveries. Orders for the models continue to be strong but the company is clearly struggling with the logistics of meeting this demand and that is worrisome for investors who will be growing concerned that the first mover advantage is being slowly eroded as competitors ramp-up their operations in the electric vehicle space."
Elsewhere, shares in Office Depot were likely to be active after the release of the company's preliminary first-quarter results.
On the macro calendar, initial jobless claims are at 1330 BST.