US pre-open: Stocks to drop amid China slowdown fears

US stocks looked set for a downbeat open on Tuesday as traders returned to their desks after the Martin Luther King Jr holiday, with worries about a slowdown in China likely to dent sentiment.

At 1215 GMT, Dow Jones Industrial Average and S&P 500 futures were down 0.6% and 0.7%, respectively, while Nasdaq futures were 0.9% lower.

Investors on Wall Street will get their first chance to react to data out of China on Monday which showed that economic growth slowed to 6.6% in 2018 - the slowest pace since 1990. Adding to the downbeat mood was the IMF's decision to cut its global growth forecast for 2019 to its slowest level in three years.

Oanda analyst Craig Erlam said: "It would appear that investors took advantage of light bank holiday trade on Monday to lock in some profits following a very encouraging post-Christmas period. This is being reflected in US futures ahead of the open, with indices on Wall Street seen opening off around half a percent, similar to the declines we’ve seen across Europe at the start of the week.

"This comes as talks between US and Chinese officials appear to be progressing well, with the 90-day deadline a little over a month away. Trump may have denied that the US is considering lifting tariffs - following reports that Steve Mnuchin has suggested doing so in order to draw more concessions from China - but it would appear that there is a desire from within parts of the administration to get a deal done."

"Meanwhile, there has also been reports that China has offered to increase imports over a six year period in an effort to reduce the imbalance, as the country reported its slowest rate of growth in 28 years. As ever with these reports, it’s difficult to pick false stories from those with substance but I think there’s probably no smoke without fire here and both sides are keen to make work towards a solution quickly."

Sticking with Sino-US relations, Toronto's Globe and Mail newspaper reported earlier that the US has told the Canadian government that it plans to formally request the extradition of Meng Wanzhou, the chief financial officer of Huawei.

On home shores, the partial government shutdown moved into its 31st day as Trump and the Democrats remained at loggerheads.

In corporate news, Johnson & Johnson was trading up 1% in pre-market trade as its fourth-quarter sales beat expectations, while Travelers was likely to be active after the release of its Q4 numbers.

Oilfield services company Halliburton was also set to be in focus as its quarterly profit and revenue surpassed analysts' expectations.

Earnings are still due from IBM and Advanced Micro Devices, while on the data front, existing home sales figures for December are at 1500 GMT.