US pre-open: Stocks seen lower ahead of Morgan Stanley earnings, May speech

US futures pointed to a weaker open on Wall Street as investors eyed earnings from banking giant Morgan Stanley and a speech by UK Prime Minister Theresa May.

At 1110 GMT, Dow Jones Industrial Average futures were down 0.4%, while S&P 500 and Nasdaq futures were 0.5% weaker.

Jamieson Blake, retail sales manager at ADS Securities, said: “Wall Street is returning from the long weekend break with futures prices pointing to a weaker open. There’s a real risk-off mindset emerging on a global basis right now and although Brexit sits at the heart of that, the anticipation over exactly what policies we’re going to see implemented – and when – by President-elect Trump is also weighing.

“Earnings season resumes with Morgan Stanley the high profile call due before the opening bell and given the solid performance reported by sector peers on Friday, expectations are for another set of impressive numbers.”

Meanwhile, oil prices advanced, underpinned by a weaker dollar. West Texas Intermediate was up 0.8% to $53.09 a barrel, while Brent crude was 1.2% higher at $56.52.

The dollar was down 0.9% versus the pound, 0.6% against the euro and 0.8% versus the yen. The pound had fallen to its lowest level since the October ‘flash crash’ on Monday after a Sunday Times report suggested May was set to reveal plans for a ‘hard’ Brexit.

IG’s Chris Beauchamp said: “The president-elect has taken a few swipes at companies of late, but now he has turned his attention to the US dollar, noting that the currency is too strong, especially versus the yuan, his favourite bugbear. As a result we are seeing a further unwind of the ‘long USD’ position that has dominated since the election.

“Quite what Mr Trump plans to do about the greenback remains to be seen, but the weakness here spells more gains for the euro and yen, and thus suggests further pain for equity markets in these countries.”

Investors on both sides of the pond were eyeing a speech by Theresa May, who was due to outline her plans for Brexit later on Tuesday, with extracts leaked from the speech consistent with the UK leaving the single market.

In corporate news, United Health nudged higher in pre-market trade as its fourth-quarter earnings beat analysts’ expectations.

Morgan Stanley was slated to report earnings ahead of the bell, while on the data front, Empire State manufacturing is at 1330 GMT.

Theresa May’s speech is reported to be at 1145 GMT although there has been no confirmation from Downing Street.