US pre-open: Futures point to more gains as investors look to central banks
US futures were pointing to modest gains before the bell on Tuesday as investors eyed a statement from the Group of Seven on how they plan to counter the impact of the Wuhan coronavirus outbreak.
As of 1230 GMT, Dow futures were up 1.02%, while S&P 500 and Nasdaq futures had the indices opening 0.74% and 1.07% firmer, respectively.
The Dow Jones closed 1,293.96 points higher in the previous session as the blue-chip index attempted to reclaim some of its recent losses with its biggest percentage gain since March 2009, amid expectations that the Federal Reserve will again cut rates.
Investors were digesting the outcome of a G7 conference call on the coronavirus, during which finance ministers and central bankers vowed to "use all appropriate policy tools" to help combat the economic impact of the outbreak.
"Alongside strengthening efforts to expand health services, G7 finance ministers are ready to take actions, including fiscal measures where appropriate, to aid in the response to the virus and support the economy during this phase. G7 central banks will continue to fulfill their mandates, thus supporting price stability and economic growth while maintaining the resilience of the financial system," they said in a joint statement.
IG analyst Joshua Mahony said: "The outperformance in US markets serves to highlight the important role of monetary policy as a driver of sentiment this week. Sharp gains across US indices serves to highlight the optimism seen off the back of a huge ramp-up in rate cut expectations. With the Fed now priced to cut by 100 basis points this year, markets are reacting to a huge shift in outlook thanks to the coronavirus.
"We appear to be within a stimulus phase, where the virus is cast aside in exchange for a renewed stimulus-led optimism. The pricing of a whole raft of central bank easing is difficult in the face of an ongoing health crisis. Traders will hope that today's meeting between G7 finance ministers results in a commitment to raise fiscal spending in response to this crisis."
In the corporate space, Barnes & Noble, Kohl's, Target and Urban Outfitters will all publish earnings throughout the course of the day.
No major data points were scheduled for release on Tuesday.