US open: Stocks seen lower ahead of Fed minutes
US stocks fell in early trade on Wednesday as investors mulled disappointing Chinese data and eyed the release of the latest Federal Reserve minutes.
At 1450 BST, the Dow Jones Industrial Average was down 0.4%, while the S&P 500 and the Nasdaq were 0.2% and 0.1% weaker, respectively. Markets were closed on Tuesday for the Independence Day holiday.
Market participants were digesting data out earlier showing that activity in China’s services sector expanded at its slowest pace in five months in June.
The Caixin/S&P Global services purchasing managers' index fell to 53.9 from 57.1 in May - the lowest reading since January.
A reading above 50 indicates expansion, while a reading below signals contraction.
The composite PMI, which includes both manufacturing and services activity, fell to 52.5 from 55.6 in May.
"Employment contracted, deflationary pressure mounted, and optimism waned in the manufacturing sector," said Caixin senior economist Wang Zhe. "Meanwhile, the services sector continued a post-Covid rebound, but the recovery was losing steam."
On home turf, all eyes will be on the Fed minutes at 1900 BST.
Tickmill Group said: "The FOMC minutes later today will be the main focus ahead of the US labour market reports due on Friday. On the back of the Fed holding rates steady last month, while signalling that further tightening might still be warranted, traders will be keen to receive the details of the meeting. Specifically, traders will be looking for any signs that point toward, or away from, a hike in July.
"The rates market is currently pricing in around a 90% chance of a .25% hike in July. Tonight’s minutes might therefore see those odds rising up to a hike being fully priced in, sending USD higher while dragging gold lower near-term. Alternatively, if tonight’s minutes err on the dovish side and rate hike pricing for July weakens, USD will likely weaken too, allowing gold room to run higher."