US pre-open: Stocks seen muted as China downgrades growth target
US stocks looked set for a muted open on Tuesday as investors continued to monitor any developments in Sino-US trade relations, after China downgraded its economic growth target for this year.
At 1250 GMT, Dow Jones Industrial Average and S&P 500 futures were 0.1% firmer, while Nasdaq futures were flat.
Spreadex analyst Connor Campbell said: "Having fallen 200 points on Monday, the Dow Jones is set to recover just a smidgen of that after the bell. Spirits dampened by the same signs of slowdown in China that hurt the European open, the futures are pointing to a barely worth noting 0.1% rise when the bell rings on Wall Street, one that would keep the Dow the wrong side of 25,850."
Beijing said overnight that it now expects the economy to grow between 6% and 6.5% this year, down from about 6.5% growth in 2018, factoring in the trade war with the US, high debt levels and financing bottlenecks for private enterprises, as it emerged that growth in China's services sector eased to a four-month low in February.
The Caixin/Markit services purchasing managers' index fell to 51.1 in February from 53.6 the month before, dropping to its lowest level in four months and coming in well below the consensus forecast of 53.5. A reading above 50 indicates expansion while a reading below signals contraction.
The data showed that new export orders were at their weakest level in five months.
In addition to the GDP target cut, the budget deficit target was expanded to 2.8% of GDP from 2.6% last year and the local government special bond quota was lifted sharply to 2.15 trillion yuan from 1.9 trillion last year. China's CPI inflation target was left at 3%.
Chinese Premier Li Keqiang told delegates at the National People's Congress of China that to boost growth, the country would aim to deliver nearly 2 trillion yuan ($298bn or £227bn) of tax cuts.
With all this in mind, any headlines on the trade war between the US and China are likely to be scrutinised. On Monday, US Secretary of State Mike Pompeo said the US and China were "on the cusp" of agreeing a deal to end the trade war. In a series of interviews with Iowa radio and television stations, Pompeo said he hoped a deal could be struck in coming weeks.
In US corporate news, shares in Target were up 5.3% in pre-market trade after the retailer's fourth-quarter earnings and sales impressed.
Department store chain Kohl's also looked set to gain at the open after it a posted better-than-expected quarterly profit, while cloud-based software company Salesforce saw its shares drop ahead of the open as its first-quarter profit missed expectations.
On the macroeconomic front, Markit's services PMI is at 1445 GMT, while the ISM non-manufacturing PMI is at 1500 GMT, along with new home sales figures.