US pre-open: Stock futures gain amid China interest rate cut speculation

US stock futures gained on Monday after a report that Chinese interest rates will be cut again and before the release of a report on services activity in the world’s biggest economy.

China is reportedly set to cut rates further and loosen lending restrictions amid concerns about falling inflation.

The news followed the People’s Bank of China’s decision on Friday to slash rates for the first time in two years.

“The PBoC decision to cut interest rates on Friday morning for the first time in two years has really given the markets a boost, particularly as people had not expected the central bank to take such bold measures,” said Alpari UK analyst Craig Erlam.

“Targeted stimulus measures had been touted and even an injection of cash, but not a cut in interest rates which potentially shows just how concerned the PBOC is about growth and, maybe even more so, the inflation outlook.”

Adding to the positive vibes in the market was remarks from European Central Bank (ECB) President Mario Draghi that the monetary authority might introduce bond buying if inflation remains low for too long in the region.

“The Fed may be becoming less accommodating but we have to remember that its balance sheet is still more than $4.5trn and interest rates remain at record lows,” Erlam said. “With this backdrop, what exactly is going to stop markets rallying into next year?”

Turning to the US economic data, at 14:45 London time Markit releases its purchasing managers’ index for services activity, which is expected to show an increase in November to 57.3 from 57.1 the prior month.

The Dallas Fed manufacturing report for November is also due at 15:30 London time. The index is forecast to drop to 9 from 10.5.

Company-wise electronic chain Best Buy Co. jumped before the Black Friday sale on 28 November.

Tesla Motors advanced following reports the electric-car maker plans to cooperate with BMW on battery technology and charging stations.