US set for lower open with Beijing still in focus
U.S. stock index futures pointed to a lower open on Monday, as European and Asian stocks traded mostly lower on concerns that Beijing might change tack in its efforts to boost the stock market.
Futures for the Dow Jones industrial average (Chicago Board of Trade: @DJ.1) fell by more than 200 points at one stage, after a report in The Financial Times over the weekend that Beijing would abandon its large-scale share purchases. This sparked declines in China's A-listed shares, although the Shanghai Composite (Shanghai Stock Exchange: .SSEC) pared losses to close 0.8 percent down.
Risk sentiment was also hit by comments from Federal Vice Chairman Stanley Fischer regarding the likelihood of a U.S. interest rate hike in September. Fischer told CNBC on Friday from the Jackson Hole symposium that it was too early to determine whether last week's market turmoil would impact the likelihood of a rate hike next month.
Fischer added in a Saturday speech that inflation pressure in the U.S. economy is likely to rebound and allow for a gradual increase in rates. He and the Bank of England's Governor Mark Carney indicated with their comments that the two central banks could be set to look past recent financial market turmoil set off by fears of slowing China growth.
Analysts at Barclays said Fischer's comments increased the probability of a rate hike taking place later than September.
"Although we continue to view economic activity in the U.S. as solid, justifying modest rate hikes, we believe the Federal Reserve is unlikely to begin a hiking cycle in this environment for fear of destabilizing markets further," Michael Gapen and Rob Martin, two analysts at the bank, said in a research note circulated on Monday.
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European stocks largely opened lower on Monday , but the London Stock Exchange was shut for a bank holiday in the U.K.
No major earnings are due on Wall Street on Monday and the only big data watch is the Chicago purchasing managers' index (PMI) for August, due at 9:45 a.m. ET.
-By CNBC's Katy Barnato . Follow her on @katybarnato.
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