Futures slip ahead of inflation numbers; China data raises demand fears

[July 10, 2023]  (Reuters) - U.S. stock index futures edged lower on Monday as investors stayed on the sidelines ahead of a key inflation report, while weak data out of China fanned worries of a looming economic slowdown.

All eyes will be on U.S. inflation data this week that will feed into the Federal Reserve's interest rate decision later in the month. A Reuters poll of economists showed growth in consumer prices is likely to have slowed in June.

Wall Street's main indexes ended the week lower on Friday after a mixed jobs report showed the domestic economy added the fewest jobs in 2-1/2 years in June, although a decline in unemployment and a higher-than-anticipated wage growth pointed to a still strong labor market.

Traders still expect the U.S. central bank to raise rates by 25 basis points later this month but are divided on the rate hike trajectory for the rest of the year as they await June consumer price index (CPI) due on Wednesday.

The second-quarter earnings reporting period kicks off this week and investors will assess the impact of tight monetary conditions and fears of an impending looming economic slowdown on businesses.

JPMorgan Chase, Citigroup and BlackRock are expected to report on Friday.

Overall, earnings for the S&P 500 constituents are expected to fall 5.7% in the second quarter, Refintiv data showed.

Also dampening the mood, Chinese consumer price figures for June teetered on the edge of deflation for the first time in over two years, while producer prices fell at their fastest pace in over seven years, adding to concerns about the health of the world's second-largest economy.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., July 7, 2023. REUTERS/Brendan McDermid

At 5:41 a.m. ET, Dow e-minis were down 9 points, or 0.03%, S&P 500 e-minis were down 8.25 points, or 0.19%, and Nasdaq 100 e-minis were down 52.75 points, or 0.35%.

U.S. listed shares of Chinese automakers including Xpeng, Li Auto and NIO fell between 1.0% and 2.4% in premarket trading after China Association of Auto Manufacturers (CAAM) retracted a pledge over the weekend to avoid "abnormal pricing".

In a bright spot, Ichan Enterprises added 4.9% after a report said Carl Icahn and banks have finalized amended loan agreements that untie the activist investor's personal loans from the trading price of his firm.

Later in the day, investors will watch out for comments from Fed speakers including Fed Vice Chair Michael Barr, Cleveland Fed President Loretta Mester and Atlanta Fed President Raphael Bostic for clues on the path of the U.S. monetary policy.

(Reporting by Johann M Cherian in Bengaluru; Editing by Saumyadeb Chakrabarty)

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