US pre-open: Stocks to rebound as investors put trade fears aside for now
US futures pointed to a positive open on Wall Street on Wednesday, with stocks set to rebound from heavy losses in the previous session as investors set aside their worries about a trade war between the US and China for now.
At 1255 BST, Dow Jones Industrial Average futures were up 0.4%, while S&P 500 and Nasdaq futures were 0.2% and 0.3% firmer, respectively.
Stocks ended in the red on Tuesday as tensions between the US and China escalated after President Trump said his administration was considering hitting China with further tariffs on $200bn in imported goods if it keeps retaliating against its tariffs.
Fiona Cincotta, senior market analyst at City Index, said: "The Sino-US conflict is not likely to fade into the background any time soon but now that some strong blows have been exchanged it will take some time for the effects and the real cost to be felt by businesses."
Meanwhile, Lukman Otunuga, research analyst at FXTM, said the sustainability of risk appetite should be questioned as fears over trade tensions remain a key market theme.
"Global equity bears could transform the current rebound into a classical dead cat bounce if trade tensions between the United States and China continue to escalate."
Berenberg analyst Holger Schmieding said the chances of a deal between the US and China may well be better than the current noise suggests.
"China probably knows that, as the weaker and less developed partner who needs access to the US market and US technology for the sake of its long-term development plans, it needs to appease Trump somewhat.
"However, striking a deal between the US and the EU could be more difficult. On matters of trade, the EU sees itself as a power on par with the US. That does not seem to register with Washington which sees the EU as a bunch of smaller nations which can be bullied individually (hence the misguided US focus on the ‘German’ angle in the trade dispute)."
In corporate news, Winnebago was set to surge at the open following the release of its third-quarter earnings, while Starbucks was likely to be in focus after it cut its third-quarter sales forecasts on Tuesday. The company said it is planning on ramping up the number of store closures next year.
Elsewhere, Oracle Corp was weaker in pre-market trade after its earnings beat but guidance was weak, while General Electric fell after S&P Dow Jones Indices said it would replace the company with Walgreens Boots Alliance.
AT&T Inc was likely to see active trading following a report that it’s in talks to buy advertising technology group AppNexus.
On the data front, current account figures are at 1330 BST while existing home sales data is at 1500 BST. Investors will also be eyeing a speech by Federal Reserve Chairman Jerome Powell at 1430 BST.