US pre-open: Futures point to gains following trade deal scare
Wall Street futures had stocks opening higher on Tuesday following some volatile trading overnight as comments regarding the US and China's trade deal were taken "wildly out of context".
As of 1225 BST, Dow futures were up 0.89%, while S&P 500 and Nasdaq-100 futures had the indices opening 0.78% and 0.62% higher, respectively.
The Dow Jones closed 153.50 points higher on Monday despite investors digesting data showing an accelerated number of new Covid-19 infections in several US states.
Futures were in the green ahead of the bell on Tuesday, having recovered from losses recorded after White House trade advisor Peter Navarro sent a shockwave through the market when he seemed to indicated the US-Sino trade deal was over.
In an interview with Fox News, Navarro was asked: "Do you think that the president sort of [...] I mean, he obviously really wanted to hang onto this trade deal as much as possible. And he wanted them to make good on the promises because there had been progress made on that trade deal, but given everything that’s happened and all the things you just listed, is that over?"
To which Navarro responded: "It’s over. Yes."
Given that relations between Washington and Beijing have been more than strained of late, concerns had grown that the hard-fought phase one trade deal might very well be under pressure.
However, Navarro later stated his remarks had been taken "wildly out of context" and that he was referring to trust between the White House and the Chinese Communist Party after it lied about "the origins of the China virus" and "foisted a pandemic upon the world".
Donald Trump also took to Twitter to reassure Americans that it remained in place, tweeting: "The China Trade Deal is fully intact. Hopefully they will continue to live up to the terms of the Agreement!"
Oanda's Craig Erlam said: "With Trump fighting election this year and determined to deflect all blame for the coronavirus Beijing's way, relations between the two are unlikely to improve and the trade deal could collapse. If Beijing really does want to see Trump removed from office, it may not even be the White House that pulls the plug. It could be an intense few months.
"Thankfully there's a lot of stimulus sloshing through the system so not only was the impact short-lived, the rebound has been pretty tasty."
In terms of Covid-19 headlines, Texas governor Greg Abbott said on Monday that the coronavirus was spreading at an "unacceptable rate" across the state, while White House economic advisor Larry Kudlow asserted that there was "no second wave coming" and that lawmakers would likely develop another stimulus package by the end of July.
On the macro calendar, IHS Markit's manufacturing PMI flash will be released at 1445 BST, while new home sales figures will be published at 1500 BST.