US pre-open: Stocks to slip as traders digest Trump-Kim agreement, eye inflation data

US futures pointed to a slightly lower open on Wall Street on Tuesday as investors were left disappointed by the lack of detail in the North Korean-US agreement and looked ahead to the latest inflation data.

At 1130 BST, Dow Jones Industrial Average, S&P 500 and Nasdaq futures were all down 0.2%.

Donald Trump and Kim Jong-un signed a document confirming that North Korea will begin dismantling its nuclear capabilities "very quickly", the US president said at a ceremony that followed a morning of negotiations. Kim said "we are leaving the past behind us" as he said "the world will see a major change".

Although Trump described the declaration as "very important" and "pretty comprehensive", analysts highlighted the lack of detail in terms of timing or checks on whether North Korea is making changes to its nuclear program.

Craig Erlam, chief market analyst at Oanda, said: "The Singapore summit with US President Donald Trump and North Korean leader Kim Jong-un went very smoothly and provided some optimism that a long-term peaceful solution can be found between the two countries. The lack of a response though may be a reflection of the fact that the agreement still lacks some detail and given the unpredictable and volatile nature of the two leaders, there’s no guarantee that it won’t run into significant difficulties. Still, progress is important which makes today a big success."

Investors were looking ahead to the release of inflation figures for May at 1330 BST, which are expected to show that price pressures picked up slightly last month, with consumer price inflation seen rising to 2.7% from 2.5% and core CPI to 2.2% from 2.1%.

"While both are above the Fed’s 2% target, they are not the central bank’s preferred inflation measures but they do come a couple of weeks earlier than them so may offer insight into what we can expect. With those measures already around target, it will be interesting to see what impact it has at the Fed meeting over the next couple of days and what, if any, impact it has on the economic projections," Erlam said.

The Fed's two-day policy meeting kicks off later on Tuesday, with markets expecting an interest rate hike for the second time this year.

There was some good news on the data front, as small business sentiment in the US improved more than expected in May, to the second-highest level in the National Federation of Independent Business survey's 45-year history.

The small business optimism index ticked up to 107.8 from 104.8 the month before, beating expectations for a reading of 105.2. Small businesses reported high numbers in several key areas including compensation, profits, and sales trends.

NFIB president and chief executive officer Juanita Duggan said: "Main Street optimism is on a stratospheric trajectory thanks to recent tax cuts and regulatory changes. For years, owners have continuously signalled that when taxes and regulations ease, earnings and employee compensation increase."

In corporate news, McDonald's was likely to be in focus as it's expected to detail changes to its organisation structure in the US later in the day.

Elsewhere, a ruling was expected on AT&T's proposed $85bn acquisition of Time Warner.