US pre-open: Stocks set for slightly weaker open ahead of long weekend

US futures pointed to a slightly weaker open on Wall Street as the early-morning gains in European markets began to fade.

At 1130 BST, Dow Jones Industrial Average, S&P 500 and Nasdaq futures were all down 0.3%.

“US markets look set to open slightly lower today ahead of the long weekend 4th July celebrations as investors contemplate a week that started on the back foot and now looks like finishing on the front foot,” said CMC Markets’ chief market analyst Michael Hewson.

“This week’s US data has by and large been fairly positive, with yesterday’s Chicago PMI for June seeing a big jump in the headline number, however the employment component was a little concerning given that it declined, which suggests that today’s ISM manufacturing number could deliver a similar outcome.”

In Europe, equity markets had opened with fairly decent gains after Bank of England governor Mark Carney said on Thursday that there may be further interest rate cuts over the summer following the UK’s decision to leave the European Union. However, European indices were paring their gains by late morning.

"The Committee will make an initial assessment on 14 July, and a full assessment complete with a new forecast will follow in the August Inflation Report," Carney said. "In August, we will also discuss further the range of instruments at our disposal."

At the same time, oil prices reversed earlier gains to trade lower, although they were still on a track for a positive week overall. West Texas Intermediate was down 0.5% at $48.08 a barrel and Brent crude was 0.4% weaker at $49.48.

Investors were also digesting data out of China on Friday that showed the manufacturing sector weakened, but the services sector improved.

The Caixin manufacturing purchasing managers' index, a private gauge of factory activity, dropped for the third month in a row to 48.6 in June from 49.2 in May, missing expectations for it to remain unchanged. A reading below 50 indicates contraction.

China’s official manufacturing PMI fell to 50.0 in June from 50.1 the previous month, in line with expectations.

Meanwhile, data from the National Bureau of Statistics showed China’s official non-manufacturing PMI, which covers services such as retail and real estate, improved to 53.7 from 53.1 in May.

Capital Economics said: “The manufacturing PMIs continue to disappoint. But given the recent resilience of the service sector and signs of strength in construction, we still aren’t overly concerned about the near-term outlook for China’s economy.”

In corporate news, Tesla Motors was under the cosh in pre-market trade after it emerged that US safety regulators would be investigating 25,000 Tesla S cars following an autopilot feature that was claimed to have caused a fatality.

Elsewhere, Hersheys and Mondelez were likely to be in focus after Hersheys rejected a bid from its rival.

Still to come on the data front, US Markit manufacturing PMI is at 1445 BST, followed by ISM manufacturing and construction spending figures at 1500 BST.