Investing.com – Wall Street futures pointed to a lower open on Tuesday as investors stayed cautious amid continued geopolitical tension concerning North Korea and election developments in Europe, all while waiting for a busy week in corporate earnings.
The blue-chip Dow futures dropped 26 points, or 0.13%, at 7:10AM ET (11:10GMT), the S&P 500 futures lost 6 points, or 0.28%, while the tech-heavy Nasdaq 100 futures fell 16 points, or 0.29%.
Tension surrounding North Korea has mounted over the past week as U.S. President Donald Trump has taken a tough rhetorical line with Pyongyang, dampening demand as risk-off sentiment takes hold.
U.S. Vice President Mike Pence visit to South Korea resulted in both countries’ pledge to forge a stronger alliance and cooperate with China to rein in North Korea, which has vowed to conduct more tests following Sunday's failed missile launch.
Pence warned North Korea on Monday that recent American military strikes in Syria and Afghanistan showed President Donald Trump's resolve should not be questioned.
Political upheaval in Europe was also causing ripples in global markets as U.K. Prime Minister Theresa May surprised investors by announcing on Tuesday that she is calling a general election for June 8.
The pound strengthened after the announcement as speculation that May could announce her resignation evaporated. GBP/USD moved towards three-month highs.
Just across the pond, lingering worries about the upcoming French presidential elections on April 23 further added to investors’ desire to take risk off the table.
As the first round of voting looms, only a few percentage points are separating the four main candidates. Markets are focused on far-right and far-left candidates Marine Le Pen and Jean-Luc Melenchon as both have promised to reevaluate France’s relationship with the European Union.
Polls widely expect the voting to pass to a second round scheduled for May 7 where the euro zone’s second largest economy will choose between the two leading candidates form the first round.
Centrist Emmanuel Macron is widely predicted to win the final vote but surprise outcomes in both the U.K.’s Brexit vote and the U.S. presidential elections have kept markets on edge.
French France 10-Year inched up on Tuesday with the spread on the benchmark Germany 10-Year widening as investors showed nervousness in the run-up to the elections.
Back stateside, U.S. housing starts and building permits for March, as well as industrial production, are due later in the session.
The Atlanta and New York Federal Reserve banks downgraded their outlook for U.S. economic growth for the first quarter on Monday on the back of disappointing data on retail sales and consumer prices in March.
In that light, the International Monetary Fund (IMF) was also scheduled Tuesday to provide updated forecasts for the world economy at 9:00AM ET (13:00GMT).
In company news, markets were focused on a deluge of top notch earnings out Tuesday.
Shares of Bank of America (NYSE:BAC) rose 1.1% in pre-market trade after the blue-chip bank beat on both the top and bottom line.
UnitedHealth Group (NYSE:UNH) gained 2% as the firm also topped forecasts.
On the downside, Johnson & Johnson (NYSE:JNJ) was off 1% after the conglomerate missed on revenue.
Goldman Sachs (NYSE:GS) was still on tap to report before the open, while IBM (NYSE:IBM) and Yahoo (NASDAQ:YHOO) were among firms set to release earnings after the market close.
Meanwhile, oil prices continued to move lower on Tuesday in profit-taking sparked by a report ahead of the holidays that showed that U.S. drilling activity continued to be on the rise.
Oilfield services firm Baker Hughes reported last week that its U.S. rig count rose by 11 to 683. That was the thirteenth straight weekly increase to its highest level in nearly two years.
U.S. crude futures fell 0.74% to $52.26 by 7:12AM ET (11:12GMT), while Brent oil lost 0.85% to $54.89.