Wall Street was set to open lower on Tuesday after China’s surprise devaluation of the yuan increased unease about the health of the world’s second-largest economy and pushed the dollar higher.
The yuan fell to its lowest against the dollar in almost three years following what the country’s central bank described as a “one-off depreciation”.
This made dollar-denominated commodities more costly for buyers using other currencies. Oil, copper, gold and grains fell after sharp gains on Monday.
“We are looking at a pullback right now. The news of the yuan raises suspicion regarding the economic growth outlook for China, that’s taking its toll on the markets,” said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.
At 8:31 a.m. ET (1231 GMT), Dow e-minis 1YMc1 were down 144 points, or 0.82 percent, with 36,779 contracts changing hands.
S&P 500 e-minis ESc1 were down 15.5 points, or 0.74 percent, with 250,486 contracts traded and Nasdaq 100 e-minis NQc1 were down 22.75 points, or 0.5 percent, on volume of 36,749 contracts.
Brent crude LCOc1 was down 1.81 percent and U.S. crude CLc1 fell 2.56 percent. Prices of commodities such as copper, aluminum, nickel, and zinc slid between 1.5 and 3.5 percent. [O/R]
Cardillo, however, does not expect the market to completely give up Monday’s gains. “(The devaluation) just means a step up in the currency wars.”
U.S. stocks had climbed on Monday, giving the S&P 500 its biggest increase since May, buoyed by gains in commodity-related shares and optimism over Warren Buffett’s deal to buy Precision Castparts.
The market could get boost from better-than-expected June wholesale inventories data to be released at 10 a.m. ET (1400 GMT). Economists expect wholesale inventories to have climbed 0.4 percent.
Apple (AAPL.O) shares were down 1.6 percent at $117.77 premarket after Jefferies raised concerns about the demand for the iPhone, primarily in China.
Google (GOOGL.O) shares rose 5.23 percent to $697.85 premarket after the company announced a surprise overhaul of its operating structure on Monday.
Shake Shack (SHAK.N) shares rose 4.8 percent to $74 after the hamburger chain reported better-than-expected quarterly profit and sales.
Symantec (SYMC.O) rose 2.53 percent to $23.49 after the antivirus maker said it would sell its data storage business, Veritas, for $8 billion in cash to a group led by Carlyle Group LP (CG.O).
Terex (TEX.N) shares rose 21.39 percent at $26.50 after the U.S. cranes and mining equipment maker and Finnish rival Konecranes (KCR1V.HE) agreed to an all-share merger.
REUTERS
