US pre-open: Stocks set to recover as investors eye inflation data

US stocks looked set to bounce back from the previous session’s losses on Thursday as investors eyed the latest reading on inflation.

At 1215 BST, Dow Jones Industrial Average futures were up 0.8%, while S&P 500 and Nasdaq futures were 0.6% and 0.5% higher, respectively, having fallen on Wednesday after President Trump followed through with his threat to slap tariffs on an additional $200bn worth of Chinese imports.

Sentiment got a lift amid indications that the US and China could resume talks on trade, following a Bloomberg report suggesting that officials from both countries have shown willingness to do so.

Oanda analyst Craig Erlam said: "Many agree that tariffs will ultimately be bad for the global economy and therefore markets but there still seems to be some hope that common sense will prevail and a full blown trade war will be averted.

"With Donald Trump now pursuing another $200bn in tariffs against China though, we may have to wait a while as he is not easing up and China - and others - is determined to prove it will not be bullied into submission. Perhaps if the economy starts to suffer or the Republicans do badly in the midterms in November Trump will be forced to consider an alternative approach."

The main focus on the data front will be the release of inflation figures for June at 1330 BST, which Konstantinos Anthis, head of research at ADSS, said will play a significant role in extending the dollar's rally or putting a stop to it depending on how it data prints.

"The US central bank is expected to raise interest rates two more times this year and a strong inflation printing today will solidify the odds for this scenario and send the dollar further to the upside. In the opposite case, the greenback will give up some ground as traders will look to bank profits from yesterdays' rally. For dollar/yen, the support is placed at the 111.30 level while the resistance higher sits at the 113.40 yearly highs," Anthis said.

Initial jobless claims are also scheduled for release at 1330 BST.

In corporate news, software company CA looked set to surge in pre-market trade after Broadcom Inc confirmed late Wednesday that it has agreed to take it over for $44.50 a share. Broadcom shares were weaker.