US pre-open: Futures slide on China-driven selloff

US stock futures turned south on Monday, on the back of a global selloff triggered by a sharp decline in Chinese stocks.

The Dow Jones Industrial Average is set to open approximately down by 107 points, while the S&P 500 and the Nasdaq are expected to begin the first session of the week 12 and 33 points lower respectively.

Chinese stocks plunge

Asian stocks fell following negative data from China and resumed selling in commodities weighing heavily on investor sentiment.

The Shanghai composite index plunged 8.47%, its worst performance in three weeks. The drop was due to the release of data which showed industrial profits fell 0.3% in June and a decline in commodity prices.

“Global investors are heavily exposed to China as a source of global economic growth,” said CMC Markets’ analyst Jasper Lawler.

“The stock market crash in China is spreading to other markets because the risk is Chinese state control will eventually send the economy to the same fortune.

Monday data

Ahead of the closely watched Federal Reserve meeting on Tuesday and Wednesday, investors will analyse a reading for June durable goods orders at 1330 BST, with analysts expecting a 2.6% rise.

“If the durable goods orders improve as much as analysts are expecting then the Dow could fall victim to a bullish run from the dollar once again,” said Spreadex financial analyst Connor Campbell.

Later in the session, at 1930 BST, the Dallas Fed manufacturing activity for July is on tap.

In company news, UBS fell 1.02% in pre-market trading after an erroneous media report saw the Swiss bank was release quarterly results earlier than expected.

However, the lender reported better-than-expected second quarter net profit.

Shares in Mylan NV plunged 12% ahead of the bell, after Teva Pharmaceuticals Industries announced it had withdrawn its offer for the drug maker after agreeing to acquire Allergan PLC’s generic drug-making business for $40.5bn.

Teva and Allergan jumped 15.3% and 9.99% respectively.

Elsewhere, the dollar was flat against the pound but lost 0.41% against the yen and 0.89% against the euro, while gold futures reversed some of last week’s losses and climbed 0.87% to $1,094.90.

Oil prices fell, with West Texas Intermediate losing 1.01% to $47.64 a barrel, while Brent shed 1.62% to $53.75 a barrel.