US pre-open: Weaker open expected after China data

US futures pointed to a weaker open on Wall Street following disappointing Chinese manufacturing data.

At 1130 BST, Dow Jones Industrial Average and S&P 500 futures were down 0.7%, while Nasdaq futures were 0.8% lower.

The China Caixin manufacturing PMI fell to 49.4 in April from 49.7 in March, missing economists’ expectations for a reading of 49.9. A reading below 50 indicates contraction.

“With the Caixin reading focusing on SME’s, it is clear that while large firms are feeling the benefits of government spending and increasingly expansionary policies at the PBoC, the smaller firms remain exposed to slowing growth and trade,” said Joshua Mahony, market analyst at IG.

At the same time, the Reserve Bank of Australia’s decision to cut interest rates to a record low of 1.75% also weighed on sentiment.

Mike van Dulken, head of research at Accendo Markets, said it “will surely only go to fuel fears of another round of ‘currency wars’ as nations fight for that competitive edge via currency weakness”.

European stocks were also on the back foot as miners slid on the Chinese data and banking stocks declined after results from Commerzbank and UBS failed to impress investors.

Meanwhile, oil prices retreated amid concerns about oversupply. West Texas Intermediate was down 0.7% to $44.48 a barrel while Brent crude was 0.5% weaker at $45.62.

On the corporate front, earnings were due from Pfizer, Molson Coors Brewing, Halliburton and Estee Lauder.

There are no major US data releases scheduled but market participants will turn their attention to Cleveland Fed President Loretta Mester who is due to appear on a panel at an Atlanta Fed conference later in the day.

A speech by Atlanta Fed President Dennis Lockhart on the economic outlook and monetary policy in Jacksonville will also be in focus.

In currencies, the dollar fell 0.2% against the pound, 0.5% versus the euro and 0.7% against the yen.