US pre-open: Futures edge lower as commodities under the cosh

US stock futures turned south on Monday, with commodity stocks under the cosh as oil prices continued to decline.

The Dow Jones Industrial Average is set to open approximately down 21 points, while the S&P 500 and the Nasdaq are expected to begin the first session of the week three and five points lower respectively.

Commodities under the cosh

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

The greenback was up 0.19% and 0.24% against the yen and the euro respectively and gained 0.38% against the pound, while gold spot 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 1.31% to $41.36 a barrel, while Brent gained 0.11%.

The economic calendar sees a flash reading of the Markit purchasing managers’ index for the manufacturing sector for November out at 1445 GMT and a report on October existing home sales released at 1500 GMT.

Before that, investors will also analyse a reading on the activity index from the Chicago Federal Reserve.

Wall Street faces a shortened week, with markets closed on Thursday for Thanksgiving Day and closing at an early 1300 EST (1800 GMT) on Friday.

“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,” pointed out IG market analyst Chris Beauchamp.

In company news, after the drug giant Pfizer slid 2.3% in pre-market trading after it agreed to buy botox-maker Allergan for $160bn, in a deal set to create the world’s biggest drug-maker.

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