US open: Equities struggle for direction as commodities remain under pressure

US stocks moved in tight ranges early on Monday, with commodity shares under the cosh as oil prices continued to decline.

Shortly before 1500 GMT, the Dow Jones Industrial Average was down 11 points to 17,812.76, while the S&P 500 and the Nasdaq were two and eight points higher, respectively.

Commodities were under pressure, as the dollar strengthened on the increasing likelihood the Federal Reserve will raise interest rates next month.

As of 1409 GMT, the greenback was broadfy flat against the yen and the euro respectively and gained 0.20% against the pound, while spot gold fell 0.70% to $1,070.51.

“Gold remains fundamentally bearish and with the direction completely dictated by US interest rate expectations, a rate increase in December threatens to send gold back towards its lows and may invite an opportunity for a further decline to $1,050,” said FXTM research analyst Lukman Otunuga.

Meanwhile, West Texas Intermediate crude was down 1.28% to $41.37 a barrel, while Brent fell 0.45% to $44.46. Oil prices looked to have recouped some of their earlier losses after the Saudi government said it was willing to use all measures necessary to ensure a stable oil market.

"The Cabinet stressed the Kingdom´s role in the stability of the oil market its constant readiness and continuing pursuit to cooperate with all oil producing and exporting countries," a statement said.

On the macroeconomic front, according to the National Association of Realtors, existing home sales declined 3.4% month-on-month to a seasonally-adjusted annual rate of 5.36m, compared with consensus for a 2.7% decline to 5.40m.

However, despite the decline, home sales remained 3.9% higher year-on-year, while median home prices rose 5.8% over the past 12 months to $219,600.

Meanwhile, the “flash” reading of the Markit manufacturing purchasing managers’ index fell to a 25-month low of 52.6 in November, down from a 54.1 reading in October and its lowest level since October 2013, reflecting a decline in all the five components.

"With the trade-weighted dollar at the highest levels in over a decade, the headwinds facing US manufacturing have yet to subside," said analysts at Barclays.

Wall Street faces a shortened week, with markets closed on Thursday for Thanksgiving Day and open only half day on Friday (with closing time set for 1800 GMT).

“History teaches us that indices tend to rise in the week leading up to Thanksgiving, as US traders look forward to their seasonal feast, so stock market bears may find it hard to gain any real traction in coming sessions,” said IG’s senior market analyst Chris Beauchamp.

Pfizer and Allergan agree merger

In company news, drug giant Pfizer slid 2.42% after it agreed to buy botox-maker Allergan for $160bn, in a deal set to create the world’s biggest drug-maker.

Target gained 0.82% after the retailer said it would offer a 15% discount on its website on Cyber Monday, while General Electric fell 0.42% after it agreed to sell its UK home lending portfolio to a private-equity consortium.

Dick’s Sporting Goods rose 0.54% after analysts at Canaccord upgraded their rating on the stock to ‘buy’, while GameStop slumped 11.7% after its third quarter sales and adjusted earnings missed analysts’ expectations.

Elsewhere, Asian equity markets began the week on a mixed note, while European stocks traded lower despite a series of encouraging PMI reports.