US pre-open: Equity markets set for further gains

US futures pointed to a firmer open on Wall Street as better-than-expected earnings from industrial bellwether Alcoa and the removal of political uncertainty in the UK boosted sentiment.

“US stocks looks set for a higher open with the S&P 500 expected to hit a new record intraday high buoyed by a rise in oil prices, expectations of stimulus in Japan and the UK and Alcoa beating quarterly earnings expectations,” said CMC Markets’ Jasper Lawler.

At 1200 BST, Dow Jones Industrial Average and S&P 500 futures were up 0.5%, while Nasdaq futures were 0.6% higher.

At the same time, oil prices were in the black, with West Texas Intermediate up 1.9% to $45.63 a barrel and Brent crude 2.3% firmer at $47.33.

The tone was also underpinned by news that Theresa May was set to succeed David Cameron as Prime Minister of the UK this week.

In addition, comments from Japanese Prime Minister Shinzo Abe, who promised on Tuesday to stimulate the country’s economy, also provided a lift. Abe, whose ruling party and coalition won a majority in upper-house elections on Sunday, said he wants “the swift formulation of comprehensive, bold economic measures".

Investors were also looking ahead to Thursday’s Bank of England rate announcement amid growing expectations of a rate cut in the wake of the UK’s decision to leave the European Union.

Bank of America Merrill Lynch said it expects the BoE to cut interest rates by at least 25 basis points, saying the central bank had nothing to gain by waiting.

In corporate news, data storage company Seagate Technology surged in pre-market trade after it announced late on Monday that it will cut 6,500 jobs globally, or around 14% of its workforce.

Elsewhere, US-listed shares of pharmaceutical firm Shire rallied in pre-market trade after the US Food and Drug Administration approved its lifitegrast eye drops for treating signs and symptoms of dry eye disease.

Later this week, banking giants Citigroup, JPMorgan Chase and Wells Fargo will report earnings.

On the data front, US wholesale inventories are due at 1500 BST. Market participants will also be watching out for a speech by Federal Reserve governor Daniel Tarullo on shadow banking at the Center for America Progress at 1415 BST.

A presentation at the National Association for Business Economics by St. Louis Fed President James Bullard at 1435 BST will also be closely watched as investors try to gauge where the Fed officials stand on a rate hike following last week’s strong non-farm payrolls report.