US pre-open: Stocks seen lower; Facebook set to drop on data woes
US futures pointed to a weaker open on Wall Street on Monday as investors look ahead to the latest policy announcement from the Federal Reserve this week, while worries about a possible trade war continue to play on investors' minds.
At 1130 GMT, Dow Jones Industrial Average and S&P 500 futures were down 0.6%, while futures in the tech-heavy Nasdaq were down a much more pronounced 2.6%.
Craig Erlam, senior market analyst at Oanda, said: "Tariffs are likely to be the main topic of conversation at the G20 meeting at the start of the week after the European Union release details of counter-measures against Donald Trump’s steel and aluminium tariffs. The list totalled around €6.4bn and will be intended to dissuade Trump from implementing tariffs on the EU, although given what’s been said previously by the US President, further counter-tariffs could be more likely. The question is whether the measures announced by the EU are sufficiently targeted so as to hurt the Republicans in the mid-term elections later this year.
"Despite what he says, I’m not sure that a trade war is what Trump actually wants from these tariffs or that he’ll find much support for one within his party. I think the measures were intended to bring certain countries back to the negotiating table and intensify NAFTA negotiations. As yet, it appears other countries are in no mood to be pushed around and if Trump insists on following through on his threats, markets may react more negatively that we’ve seen so far."
The latest interest rate decision from the Fed is due on Wednesday, with Fed funds futures implying an 80% chance of a 25 basis points increase. With a rate hike expected, the main focus is likely to be on what the dot plot suggests the Fed might do going forward.
Rabobank said much will be read into Fed chair Jerome Powell's interpretation of the economic outlook and how he chooses to address the fact that the Fed still remains some way from reaching its inflation goals.
"The fact that the Fed has already admitted it remains somewhat bewildered as regards the slow development of wage pressures in spite of a low headline unemployment may temper a more hawkish tone from the new Fed Chair. That said, the minutes for the January meeting showed increased confidence in the economy while Powell’s testimony confirmed this optimism."
In corporate news, Facebook shares retreated in pre-market trade following news that Cambridge Analytica acquired Facebook-derived data on more than 50m people and used it to conduct micro-targeted political campaigns thought to have contributed to the election of Donald Trump and the UK's Brexit vote.
Newell Brands looked set to gain at the open, however, after saying it will appoint four directors to its board picked by billionaire investor Carl Icahn. Icahn revealed on Friday that he had taken a 6.9% stake in the sharpie pens maker.
Elsewhere, Dana Inc was likely to be in focus after upping its 2018 sales outlook to between $7.75bn and $8.05bn and its adjusted earnings per share guidance to between $2.75 and $3.05.
There are no major US data releases due.