US pre-open: Stocks to rise on China data but bank earnings the main focus

US futures pointed a positive open on Wall Street following the release of encouraging Chinese inflation figures, although there was the potential for volatility with the likes of Citigroup, JPMorgan Chase and Wells Fargo due to report their earnings before the opening bell.

At 1100 BST, Dow Jones Industrial Average, S&P 500 and Nasdaq futures were all 0.4% firmer.

Meanwhile, oil prices advanced. West Texas Intermediate was up 1.1% to $50.98 a barrel and Brent crude was 0.8% higher at $52.42.

Sentiment got a boost from data showing China’s headline consumer price index advanced at a 1.9% year-on-year clip in September, after a rise of 1.3% in August, as food price gains accelerated to 3.2% year-on-year from 1.3%.

Non-food price increases also quickened to a 1.6% pace - a two-year high - up from 1.4% the month before. Economists had forecast a gain of 1.6% in headline CPI.

Producer prices rose 0.1% year-on-year after declining by 0.8% in August, with a rise in industrial commodity prices responsible for the move.

However, the main focus on Friday was expected to be on banks, with heavyweight names all on the slate.

Paul Webb, chief executive officer at ADS Securities London, said: “The low interest rate environment is expected to take a toll on the banking sector in general, so with Alcoa having already disappointed with its numbers earlier this week, more downbeat data could cast something of a shadow over the market as we run into the weekend break.

“US retail sales data for September is also slated to be published ahead of the open and with the Federal Reserve clearly jittery over inflationary pressures, it seems as good as inevitable that we’ll see a marked increase being posted here. Again, anything that confirms the idea of a US rate hike before the year is out will be seen as negative for equities – Wall Street is already well down from where we started the week, so a negative finish now looks highly likely.”

Retail sales figures are at 1330 BST, while business inventories and University of Michigan sentiment are at 1500 BST.

Investors will also be eyeing a speech by Federal Reserve Chair Janet Yellen in Boston at 1830 BST.

Oanda's Craig Erlam pointed out that last December, Yellen managed to get unanimous support for a rate hike, the first in almost a decade and one that some members may not have been convinced by.

"Given this show of leadership almost a year ago and the fact that three of the ten voting members dissented at the last meeting, I think it's clear that Yellen holds the key to when rates will rise. Her views will therefore be scrutinised for any clues on the timing of the hike and given that markets have strongly priced in a hike, any hint of doubt with regard to December could be seen as a sign of weakness by the markets and could result in dollar weakness and falling treasury yields."