US pre-open: Stocks to drop again as investors eye FOMC minutes
US futures pointed to another downbeat session on Wall Street on Wednesday amid ongoing geopolitical concerns, as investors eyed the release of the latest Federal Reserve minutes.
At 1210 BST, Dow Jones Industrial Average and S&P 500 futures were down 0.7% and 0.6%, respectively, while Nasdaq futures were 1% lower. Stocks ended in the red on Tuesday after President Trump said he was not happy with the progress being made on trade talks between the US and China.
He also said that there is a "very substantial chance" a historic summit with North Korea's Kim Jong-Un next month may not happen.
Konstantinos Anthis, head of research at ADS Securities, said: "Following a remark from US President Donald Trump that the historic meeting with Kim Jong-Un might or might not happen, the dollar is driving higher against the European and commodity currencies while safe haven assets like the yen and gold are also ticking to the upside. At the same time, global equities reversed their recent gains and are now trending lower as investors are going on the defensive.
"The important question is whether this risk-off rally has legs, meaning if we should prepare for a broader re-escalation of geopolitical risks and how this would affect currencies and equities. In our opinion, President Trump's remarks have become a habit before key geopolitical meetings: we've seen the same tactic before his Treasury Secretary began negotiating with China and the end result was a positive one in terms of avoiding conflict on the trade dispute. As such, we believe that this is part of a negotiating tactic suggesting that the risk-off rally in the yen and gold should have little room to grow and both instruments will soon resume their bearish trend."
In corporate news, Tiffany's surged in pre-market trade as the jeweller's first-quarter results beat analysts' expectations thanks to strong demand in the US. The company also announced a new $1bn share buyback programme.
Discount store retailer Target looked set for a down day, however, after its first-quarter revenue beat expectations but profit missed.
Markit's manufacturing and services PMIs are at 1445 BST, while new home sales for April are at 1500 BST. At 1900 BST, the minutes from the Federal Open Market Committee's meeting earlier this month will be released.
CMC Markets analyst David Madden said: "Last month the US central bank confirmed they were confident the inflation target would be achieved, but were less optimistic about growth. Traders are pencilling in an interest rate hike next month, but they remain divided about how many more rate hikes we could see beyond June."