US pre-open: Stocks seen slightly lower ahead of US-China trade talks

US stocks looked set for a mostly lower open on Monday as investors awaited the outcome of the latest round of trade talks between the US and China.

At 1225 GMT, Dow Jones Industrial Average futures were flat, while S&P 500 and Nasdaq futures were down 0.1% and 0.3%, respectively.

Investors were likely to be wary as officials from the US and China were due to meet in Beijing later for what will be the first discussions between the two since Donald Trump and Xi Jinping agreed a temporary truce in December.

James Hughes, chief market analyst at Axi Trader, said: "Although China has already telegraphed that it is happy to resolve the trade spat amicably, it’s difficult not to see Beijing as pushing for the best deal here. The White House is on the back foot, with a potentially damaging government shutdown ongoing and Donald Trump very much seen as the culprit of the recent stock market volatility. The trade deal - assuming it’s reached - should be good for stocks, but this point won’t have escaped Chinese negotiators.

"There’s not too much on the US economic calendar today, with the composite ISM reading later today not expected to deliver much of interest. Arguably the biggest risk here is that further signs of rampant economic growth will push back against that restrained message Jerome Powell issued on Friday, bolstering the greenback and adding fresh downside pressure to equities."

ISM's non-manufacturing purchasing managers' index for December is at 1500 GMT.

Meanwhile, the government shutdown entered its third week. Trump promised over the weekend to build his Mexico border wall out of steel as a compromise and repeated his threat that he may seek the necessary funding by declaring a state of emergency.

In corporate news, Eli Lilly said earlier that it has agreed to buy biopharmaceutical company Loxo Oncology for about $8bn in cash. The price represents a 68% premium to Loxo's closing share price on Friday.

Utility operator PG&E Corp shares tumbled ahead of the open following reports that the company is exploring a bankruptcy filing and asset sales.

Elsewhere, medical implant devices manufacturer Abiomed was higher in pre-market trade following the release of its third-quarter numbers.

Steel and metal manufacturer Commercials Metals was a touch weaker, however, after its first-quarter earnings.