US pre-open: Stocks seen lower, Nasdaq set for more losses

US futures pointed to a negative open on Wall Street on Monday, with the tech-heavy Nasdaq set to suffer more heavy losses.

At 1150 BST, Dow Jones Industrial Average and S&P 500 futures were down 0.1% and 0.2%, respectively, while Nasdaq futures were off 0.7%.

On Friday, the Nasdaq slumped 1.8%, dragged lower by a note from Goldman Sachs which highlighted a "valuation air pocket" in the tech sector. "Driven by the rise of megatech, momentum, as a factor, has built a valuation air pocket underneath it creating cause for pause." It added: "Our view is that FAAMG - Facebook, Amazon.com, Apple, Microsoft and Alphabet - a group of five stocks, not four - have been the key drivers of both the (S&P 500 and Nasdaq 100) returns year-to date."

Spreadex analyst Connor Campbell said: "Heading into the afternoon and, while there isn’t much in the way of data, the US open could be interesting from a tech-perspective. Last Friday all of the sector’s big hitters - Apple, Microsoft, Amazon, Alphabet and Facebook- suffered some serious losses; if that decline continues after the bell rings on Wall Street it may mark the end of the recent record high-hitting rally."

There are no major data releases due on Monday, but investors will be looking to Wednesday's rate announcement from the Federal Reserve amid expectations of this year's second rate hike.

IG analyst Joshua Mahony said; "Given the USD weakness we have seen in the face of such rate hike expectations, it makes you wonder what would happen in the event that the Fed chose not to act this time around."

Meanwhile, Monex Europe said: "The calm is unlikely to last, this week’s calendar is jam packed with top tier events and releases. Producer Prices will be released on Tuesday, ahead of the Consumer Price Index and Retail Sales on Wednesday. The Federal Open Market Committee will announce their latest decision – quite probably a rate hike – on Wednesday evening. The second half of the week will see less action, although Industrial Production data will be out on Thursday followed by Building Permits on Friday."

In currency markets, the dollar was up 0.5% versus the pound, which took another leg lower after Moody's warned over the impact of a hung parliament, as Prime Minister Theresa May prepared to meet with Conservative party backbenchers angered by the election result.

In corporate news, technology giant Apple was down 1.8% in pre-market trade after Mizuho Securities cut its stance on the stock to 'neutral' from 'buy'.