US pre-open: Stock futures in the red ahead of Q2 earnings season

Wall Street futures were in the red ahead of the bell on Monday as market participants prepped for the beginning of Q2 earnings season.

As of 1220 BST, Dow Jones futures were down 0.40%, while S&Pp 500 and Nasdaq-100 futures had the indices opening 0.53% and 0.73% lower, respectively.

The Dow closed 46.40 points lower on Friday but major averages still managed to deliver a winning week following a stronger-than-expected jobs report.

Covid-19 was in focus early on Monday, with Shanghai declaring its first case of the BA.5 subvariant, forcing Macau to close its casinos for a week.

Also drawing an amount of investor attention was the yield on the two-year Treasury note, trading roughly two basis points above its 10-year counterpart at 3.08% - an inversion many see as a recession indicator.

However, Monday's primary focus may will be the news that Elon Musk has opted to terminate a deal worth $44.0bn to buy social media giant Twitter. The tech billionaire alleged that Twitter had been dishonest regarding the number of bots and fake accounts on the platform.

Swissquote's Ipek Ozkardeskaya said: "The week starts on mixed sentiment, as European and US futures are down, and the US dollar is up this morning.

"But of course, investor sentiment could rapidly turn around. This Wednesday's inflation data, particularly, carries the risk of killing the post-jobs data joy. Due Wednesday, the US inflation data is expected to print a further advance to 8.8% in June, from 8.6% printed a month earlier. If that’s the case, or if we see a bigger number, the Fed hawks will be out for hunt again. We will perhaps see a further rise in US yields, and that could force investors to give back a part of last week’s gains. Activity on US fed funds hint at 100% chance of seeing at least a 75bp hike in the next FOMC meeting, and started pricing in the possibility of a 100bp hike, which currently stands around 7%."

No major corporate earnings or data points were scheduled for release on Monday but PepsiCo, Delta Air Lines, JPMorgan Chase, Morgan Stanley, Wells Fargo, and Citigroup will all report before the end of the week.

Reporting by Iain Gilbert at Sharecast.com