US pre-open: Stocks to start the year higher as dollar stumbles

Stocks on Wall Street looked set to kick off the new year in the black, with futures pointing to a higher open as the dollar fell back.

At 1250 GMT, Dow Jones Industrial Average and S&P 500 futures were up 0.3%, while Nasdaq futures were 0.4% firmer.

On the data front, investors will be eyeing the release of Markit’s latest manufacturing purchasing managers’ index at 1445 GMT, but the corporate side of things looked pretty bare.

Spreadex analyst Connor Campbell said: “Looking to this afternoon and the Dow Jones is set to benefit from the dollar’s decline, with the futures pointing to a 50 point increase when the bell rings on Wall Street. The Dow’s had a pretty stagnant few weeks, failing to react too much to Trump’s tax triumph as it struggles to break above 24,800 with any sense of momentum. A final Markit manufacturing PMI of 55.0 - an improvement on December’s 53.9 - is unlikely to drastically change that.”

Meanwhile, the dollar was down 0.4% versus the pound at 0.7374 and 0.5% weaker against the euro at 0.8287.

FXTM research analyst Lukman Otunuga said: “It seems that the initial market excitement witnessed during early Q4 of 2017 over US tax reforms has diminished, while concerns remain elevated over stubbornly low inflation levels. Although sentiment remains bullish towards the US economy amid the improving economic conditions, investors seem more concerned with tax reforms and rate hike expectations.

“While the dollar was initially supported by the prospect of tax cuts being implemented, bulls may take a pause as investors investigate whether the cuts will lift growth materially in the longer run. The dollar remains at threat of depreciating further in 2018, if the impact of Trump’s $1.5 trillion tax overhaul fails to meet market expectations.”