US pre-open: Futures edge lower as slump in Chinese stocks weighs on sentiment

The Dow Jones Industrial Average is expected to open down 52 points, while the S&P 500 and the Nasdaq are set to begin the session six and 15 points lower.

Chinese stocks slump

China’s Shanghai Composite Index recorded its biggest fall in three weeks after slumping 6.15%, as investors dismissed signs of recovery in the country’s housing market, while European equities struggled for direction.

"Pre-market the US is tending slightly lower following suit with most Asian and European markets," Markus Huber, senior analyst at Peregrine & Black

"Overall sentiment remains neutral to negative with a rate hike in September still likely while at the same time corporate earnings growth appears to be slowing making them less attractive compared to they European peers."

Elsewhere, the dollar was broadly flat against the euro but fell 0.16% against the yen and lost 0.76% against the pound, after the British currency was boosted by a stronger-than-expected CPI reading.

Gold futures climbed 0.09% to $1,119.40, while oil prices slid, with both West Texas Intermediate and Brent losing just over 0.4% to $41.68 a barrel and $48.54 a barrel respectively.

Tuesday data

The economic calendar sees the release of a report in housing starts for July at 1330 BST, while building permits for last month are also on tap at the same time.

Analysts expect housing starts to have risen to 1.185m last month but analysts warned the data on offer on Tuesday was unlikely to have major repercussion on a market that has struggled for direction in recent weeks.

“Building permits and housing starts are at the bottom end of rate hike relevant, market moving figures and unless there is something spectacular in either number investors are unlikely to care,” said Connor Campbell, financial analyst at Spreadex.

In company news, Home Depot rose 0.57% ahead of the bell, after the home improvement chain’s second quarter results met expectations.

Luxury handbag maker Coach climbed 0.28% after analysts at Jefferies lifted their rating on the stock from ‘hold’ to ‘buy’ citing “visible green shoots in the business.”

Retailer Wal-Mart slid 2.31% in pre-market trading, after the group’s second quarter results fell short of estimates as currency headwinds weighed heavily on profit.

US-listed shares of Royal Dutch Shell could be in focus after the oil giant received a final approval from the US government to drill for oil and natural gas in the Arctic Ocean.