US pre-open: Futures point to further losses as US blacklists Chinese AI firms
US futures had stocks opening lower yet again on Tuesday after the US expanded its trade blacklist to include China's top artificial intelligence firms.
As of 1230 BST, Dow futures were down 0.73%, while S&P 500 and Nasdaq-100 futures had the two indices opening 0.66% and 0.69% lower, respectively.
The Dow closed 95.70 weaker on Monday as US stocks finished as they started - in the red - as market participants looked to a meeting between United States and Chinese trade officials later in the week with a degree of scepticism.
Market focus for Tuesday was still largely attuned to global trade developments, with high-level negotiators from the US and China set to kick off a brand new round of talks in Washington DC on Thursday.
However, ahead of the talks, the White House expanded its trade blacklist to include Chinese artificial intelligence firms as part of an effort to punish Beijing for its recent treatment of Muslim ethnic minorities.
Chinese foreign ministry spokesman Geng Shuang told reporters to "stay tuned" in regards to retaliatory measures.
"We urge the US side to immediately correct its mistake, withdraw the relevant decision and stop interfering in China's internal affairs," said Geng, who also denied that the government abused human rights in Xinjiang.
Market participants and analysts alike expected the decision to harm the chances of a breakthrough later this week.
Oanda's Edward Maya said: "Political posturing ahead of the US-China high-level talks that begin on Thursday are dangerously raising the odds that we may not see a mini-trade deal or major de-escalation in tariffs.
"The odds for some sort of a trade deal to get done this week seem to have fallen from a coin flip to just 40%."
However, Moya added that both sides needed "a win" this week and despite the latest flare-ups, he expects to still see some progress come out of this week's talks.
On the data front, the National Federation of Independent Business' small business optimism index revealed that confidence among small-business owners fell in September, principally due to the impact of tariffs and uncertainty about the future of the US economy.
The NFIB's index came to 101.8 last month, down from the reading of 103.1 in August, marginally below the consensus of 102.0, and the lowest reading since February.
Ian Shepherdson at Pantheon Macroeconomics said: "It's not a coincidence, in our view, that this follows the breakdown in trade talks with China, which was followed by increased tariffs on non-consumer goods and new tariffs on consumer goods, with the first batch imposed on September 1.
"The full hit, therefore, is yet to work through, but small business owners clearly are apprehensive."
Still to come, producer price index figures for September will be released at 1330 BST.
In Fed speak, chairman Jerome Powell, Neel Kashkari and Charles Evans were all set to make speeches on Tuesday.
In corporate news, Domino's Pizza and Levi Strauss will both post their latest quarterly results throughout the course of the day.