US pre-open: Stock futures edge higher ahead of data, Fed

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LONDON (ShareCast) - US stock futures were showing small gains ahead of the opening bell on Wall Street on Tuesday as markets await inflation and housing market data.

Futures across the three main US indices were trading 0.1-0.2% higher by 08:10 in New York (Frankfurt: HX6.F - news) .

The consumer price index due out at 08:30 is expected to show that prices rose by just 0.2% in May, down from the 0.3% gain the month before. The annual rate of inflation is forecast to remain unchanged at 2.0%.

Meanwhile, building permits are predicted to inch 0.1% higher to 1.06m in May, while housing starts are estimated to fall by 3.9% after a 13.2% jump in April.

Despite the positive moves in pre-market trade, gains were limited as investors showed caution ahead of a two-day policy meeting at the Federal Reserve which kicks off later on.

Analysts widely expect the US central bank to continue tapering asset purchases by $10bn a month to $35bn, but will be keeping an eye out for comments on the economic outlook from Fed Chair Janet Yellen.

Analysts at ETX Capital pointed out that, if the current rate of tapering continues, the Fed is on target to end its bond-buying programme by the start of the fourth quarter "which is now fully priced in by the markets".

"However, it's more difficult to gauge the extent of any shift in policy towards tightening from Fed's current accommodative stance."

Meanwhile, tensions in Iraq will also be closely watched during today's session after the US government deployed 275 personnel to the country to provide support and security for the US embassy in Baghdad.

Yet more violence overnight has kept markets in a cautious mood across Europe today on reports that parts of the city of Baquba - just 37 miles from the capital - have been taken over by the rebels.

In US corporate news, medical devices group Medtronic (NYSE: MDT - news) was a high riser in pre-market trade after both Morgan Stanley (Berlin: DWD.BE - news) and Credit Suisse (NYSE: CS - news) upgraded the stock after the $42.9bn takeover of rival Covidien (NYSE: COV - news) announced yesterday.

In other M&A news, Kindred Healthcare (NYSE: KND - news) lifted its bid for Gentiva Health Services (NasdaqGS: GTIV - news) , causing shares in the home-health and hospice group to rise.

BC

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