US open: Stocks a little weaker as investors eye central bank meetings

US stocks opened a little lower on Monday as investors looked ahead to a busy week in terms of corporate releases and a rate decision by the Federal Reserve.

At 1450, the Dow Jones Industrial Average and the S&P 500 were both down 0.3%, while the Nasdaq was off 0.1%.

At the same time, oil prices were in the red. West Texas Intermediate was down 2.1% at $43.28 a barrel while Brent crude was 1.8% lower at $44.87.

Over the weekend, finance chiefs at the G20 summit in China said the UK’s decision to leave the European Union has heightened risks for the global economy and called on the UK to remain a close partner of the EU. However, the G20 said it has the tools requited to deal with the potential fallout from Brexit.

The main focus in the US this week will be the Fed’s rate announcement on Wednesday, with market participants expecting the bank to keep rates on hold.

Ranko Berich, head of market analysis at Monex Europe, said: “The latest US data contains plenty of evidence to help the hawks on the FOMC make their case. Price and labour market data indicate a tightening labour market and rising wages, and, after the dip seen in May, June’s jobs report showed job creation and wage growth once again beginning to pick up.

“The Fed may well choose to sit tight and wait for more data, but considering the strong data we’ve seen recently, markets could hardly be less prepared for a hike this week. Federal funds futures are priced for an approximately 8% chance of an increase, after the FOMC has repeatedly found new excuses to avoid raising rates at each successive meeting.”

Investors will also be eyeing a rate announcement from the Bank of Japan on Friday. Deutsche Bank’s economists expect a cut in the interest rate on its policy-rate balance from -10bps to -20bps and an increase in its purchasing of ETFs and Japanese real estate investment trusts to an annual rate of Y6tn and Y180bn, respectively. They see little chance of an increase in the Japanese government bond purchasing pace.

In corporate news, Verizon Communications was on the back foot after confirming that it has agreed to buy Yahoo Inc for $4.83bn

Elsewhere, telecommunications company Sprint Corp surged after its first-quarter revenue surpassed analysts’ expectations.

CVS Health was in the red after it said it is making naloxone, an opioid overdose-reversal drug, available without prescription across Texas.

Shares in drug developer Ocular Therapeutix were weaker after the US Food and Drug Administration denied approval of its treatment for post-operative eye pain.