US pre-open: Stocks to drop as investors grow sceptical about trade truce
US futures pointed to a negative open on Wall Street on Tuesday as the trade truce rally ran out of steam.
At 1225 GMT, Dow Jones Industrial Average futures were 0.5% lower, while S&P 500 and Nasdaq futures were down 0.4% and 0.6%, respectively.
Market participants were growing increasingly sceptical about the truce, with confusion about when it would kick off also undermining sentiment.
Trump's economic advisor, Larry Kudlow told reporters on Monday that it would start on 1 January, but the White House later issued a statement saying that the 90-day truce began on 1 December.
There was also confusion over the details of the truce, with several senior White House figures contradicting one another.
Oanda analyst Craig Erlam said: "The weekend dinner date between Trump and Xi initially drew a positive response, with markets rallying at the prospect of the trade war being paused for a few months and possibly even stopped altogether is talks progress well. This has since drawn plenty of scepticism about just how significant an agreement it was and what can possibly be achieved in the next few months that will prevent further tariffs being imposed.
"This may be a little harsh as a deal isn’t necessary in the 90-day window, the two sides just need to agree on the parameters of a future deal and what will be included in order to extend the truce and work towards removing tariffs. Whether this will happen is certainly up for debate but I do believe that this is a positive step forward from where we were prior to the meeting and that’s the important thing."
In corporate news, watchmaker Movado looked set to drop at the open after its third-quarter revenue beat expectations but profit fell short.
Industrial distributor HD Supply was also likely to be in focus as its third-quarter earnings and revenue topped analysts' forecasts and the company upped its full-year guidance.
Elsewhere, AutoZone shares could be active after its first-quarter same-store sales rose 2.7%, beating expectations for a 2% increase.
Dollar General was down 4.2% in pre-market trade after its third-quarter results, as it cut its 2018 earnings per share outlook to $5.85-$6.05 from $5.95-$6.15.