US pre-open: Stocks seen muted as investors keep an eye on bonds
US stocks looked set for a muted open on Wednesday as investors kept an eye on bond markets.
At 1215 BST, Dow Jones Industrial Average and S&P 500 futures were flat, while Nasdaq futures were 0.1% weaker.
Meanwhile, bond yields continued to inch higher, having eased back a little on Tuesday following fresh seven-year highs. The yield on the 10-year Treasury note was up 1.8 basis points to 3.23%.
Market participants were also likely to be eyeing Italy's bond markets as yields there spiked briefly after Deputy Prime Minister Matteo Salvini said there will be no changes to the government's budget. The rise in yields was also attributed to an article in Italian newspaper La Stampa in which Moody's Analytics' senior economist Mark Zandi said the country's budget plan was a mistake that will be reflected in Italy's rating.
Trade relations between the US and China were also on investors' minds again after US Treasury Secretary Steven Mnuchin renewed a warning to China not to engage in competitive currency devaluation.
Neil Wilson, chief market analyst at Markets.com, said: "As previously argued there is a risk that a full-blown trade conflict leads naturally to a currency war as countries affected by tariffs devalue to remain competitive. Currency and trade are just two sides of the same coin. Without the firepower on trade, China’s chief weapon is its currency and it is no surprise if it were to utilise this."
Oanda analyst Craig Erlam said: "There are a number of worries for investors right now, from the pace of rising bond yields and the impact on investor sentiment, to Italy’s populist coalition playing a game of chicken with the European Commission, stalling Brexit negotiations and the ongoing trade conflict between the US and China.
"This is all taking its toll on investors and while the US may have recently scaled record highs, supported in a major way by tax reforms passed late last year and the economic fallout from them, others are not faring as well and the longer it goes on, the more it’s likely to catch up with Trump as well."
In corporate news, fastener and tools distributor Fastenal fell in pre-market trade despite posting better-than-expected third-quarter profit and sales.
Elsewhere, generic pharmaceuticals group Akorn surged 12% in pre-market trade after it received approval from the FDA for its bimatroprost ophthalmic solution.
US-listed shares of Chinese electric car maker Nio were also sharply higher as it emerged that the second-biggest shareholder of Tesla - Baillie Gifford - has taken an 11.4% stake in the company.
Sears Holdings tumbled more than 30% ahead of the bell after the Wall Street Journal reported that it has hired advisers to prepare a bankruptcy filing.
Footwear retailer DSW was likely to be in focus after it and Authentic Brands agreed to buy the Camuto Group for about $375m.
On the data front, the producer price index for September is due at 1330 BST.