US pre-open: Stocks set to bounce back from Brexit selloff

US futures pointed to a positive open on Wall Street, where stocks were set to bounce back from the Brexit-fuelled selloff.

At 1050 BST, Dow Jones Industrial Average and S&P 500 futures were up 1.2%, while Nasdaq futures were 1.1% higher.

At the same time, oil prices advanced, with West Texas Intermediate up 2% to $47.24 a barrel and Brent crude up 1.7% at $47.97. Prices were supported by the possibility of a strike in Norway, where worked on oil and gas fields could go on strike from Saturday if they do not agree a wage deal.

Despite the positive tone in financial markets, analysts were sceptical that the rally had any legs, suggesting it may be little more than a ‘dead cat bounce’.

“While equity volumes are picking up, they are still below average and so bargain-hunting may be helping as opposed to emergence of genuine support as markets adjust to a new normal and the prospect of the UK outside the EU,” said Mike van Dulken, head of research at Accendo Markets.

Lee Wild, head of equity strategy at Interactive Investor, said: “Shares certainly look cheap on paper, but the true impact of Brexit on company profits remains a great unknown. Dividend forecasts are being scaled back, too, and there’s a sense that prices could go lower before we see broad-based buying.

In currency markets, the pound was recovering somewhat after hitting fresh 31-year lows on Monday, trading up 0.9% against the dollar at $1.3337. But Rabobank expects sterling to drop further over the coming weeks to around the 1.25 level.

“From the perspective of technical analysis it is worth pointing out momentum indicators are stretched (the sell-off looks overdone) and we may witness at least some respite for the severely battered sterling. That said, Brexit caused a massive damage to the long-term GBP/USD chart with the downside likely to remain vulnerable over the mid-term horizon,” it said.

In corporate news, shares of Tesla Motors rose in pre-market trade. The electric car maker said on Monday that it will form a two-person committee of independent board members to evaluate its buyout offer for SolarCity.

ReachLocal was set for further gains after rocketing just over 166% on Monday when Gannett announced that it was buying the digital marketing company for $4.60 a share.

On the macroeconomic calendar, the third release of first-quarter US GDP is at 1330 BST. S&P Case-Shiller house prices are at 1400 BST, while US consumer confidence is at 1500 BST.