US pre-open: Stock futures fall on China slowdown worries
US stock futures pointed to a lower Monday on disappointment that China failed to deliver anything concrete on stimulus plans to turnaround the nation’s ailing economy at the G20 meeting.
Investors had been hoping China’s government would announce further stimulus measures to boost the economy over the weekend after People’s Bank of China chief Zhou Xiaochuan said on Friday there was more room for easing. However, such an announcement failed to materialise at the G20 meeting, sending Asian stocks into the red.
S&P 500 futures fell 0.2% to 1,938.25, while Dow Jones Industrial Average futures shed 0.3% to 16,559 and Nasdaq 100 futures lost 0.4% to 4,213.
Meanwhile, the PBoC guided the yuan lower for fifth straight session on Monday, adding to worries that China is using the manipulation of its currency as a major tool to support the economy.
China’s central bank also announced on Monday that it was cutting the reserve-ratio for banks by 0.5 percentage points. The ratio refers to the amount of cash China's lenders must keep as reserves.
“The People’s Bank paused monetary loosening in recent weeks apparently on concerns that it would worsen capital outflows,” according to Capital Economics.
“The government stepped up fiscal support instead. Today’s cut to the required reserve ratio (RRR) is therefore both confirmation that policymakers retain a bias towards easing and also a signal that they are less concerned about outflows getting out of control.”
In the US, the Chicago purchasing managers’ index will be released at 1445 GMT, US pending home sales figures are due at 1500 GMT, and the Dallas Fed manufacturing index will be published at 1530 GMT.
Oil prices will continue to be monitored throughout the session as investors hope for a recovery as March approaches. West Texas Intermediate crude rose 0.33% to $32.89 per barrel and Brent increased 0.87% to $35.41 per barrel at 1315 GMT.
On the company front, shares in Valeant Pharmaceuticals International fell before the opening bell as the drugmaker said it would reschedule its planned call to discuss fourth quarter results, which had been pencilled in for Monday. The group also announced on Sunday evening that chief executive Michael Pearson has returned from medical leave.
Lumber Liquidators Holdings slumped in pre-market after the flooring retailer reported a worse-than-expected loss in the fourth quarter.
NRG Energy and Consol Energy’s stocks could move after they said they would cut their dividends amid a continued slump in commodity prices.
The dollar strengthened against the pound and the euro by 0.12% and 0.39% respectively, but weakened 0.81% versus the yen.