Investing.com – Wall Street futures pointed to a flat open with global investors showing caution as tensions between the U.S. and North Korea came back in focus and waiting for developments on U.S. tax policies amid political drama in a session with no major economic reports.
The blue-chip Dow futures edged down 3 points, or 0.01%, at 7:03AM ET (11:03GMT), the S&P 500 futures slipped less than a point, or 0.02%, while the tech-heavy Nasdaq 100 futures dropped 5 points, or 0.07%.
Following a ramp up in geopolitical tensions earlier this month after a heated exchange of rhetoric between U.S. President Donald Trump and Pyongyang, American and South Korean forces began their annual military exercises Monday, which will involve computer simulations designed to prepare for war with a nuclear-capable North Korea and are expected to last around 10 days.
South Korean President Moon Jae-in said the joint drills, called Ulchi Freedom Guardian, were purely defensive and did not aim to raise tensions on the peninsula, though Pyongyang suggested that the military maneuvers are “reckless behavior driving the situation into the uncontrollable phase of a nuclear war.”
Market participants will also continue to focus on the Trump administration's ability to implement its pro-growth agenda as the White House continues to wade through a series of upheavals.
Last week, rumors that Trump’s chief economic advisor Gary Cohn, widely applauded by markets on the assumption that the ex-Goldman executive fosters better financial stability, could leave the White House caused waves in equities while Friday’s announcement that Steve Bannon, one of Trump’s closest advisors that reportedly caused controversy with Cohn and U.S. Treasury Secretary Steven Mnuchin, was leaving the administration appeared to calm investors.
Markets will now watch to see if tensions have receded far enough to allow Trump to begin attempting to push through anticipated tax reforms.
The dollar showed little change Monday in that political environment and as trading volumes were expected to remain light with no major U.S. data to be released throughout the day.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down about 0.1% to 93.28 by 7:05AM ET (11:05GMT), not far from Friday’s low of 93.25.
In a light week for economic data, investors were looking ahead to the annual Jackson Hole economic symposium where the heads of the U.S. and European central banks will be making keynote speeches.
Though Federal Reserve chair Janet Yellen and European Central Bank president Mario Draghi are widely expected not to rock the boat by offering new insight into their respective paths of monetary policy in their speeches, market players will pay close attention for any hints from the sidelines.
With the second quarter reporting season having largely come to a close, company headlines were focused on the fact that Maersk (CO:MAERSKb) as the world’s largest shipping firm agreed to sell its oil and gas division, Maersk Oil, to French oil major Total (PA:TOTF) in a deal valued at around $7.5 billion.
Meanwhile, oil showed mixed trade as concern over rising production in the U.S. kept prices in check.
Data from the U.S. Energy Information Administration showed last week that total domestic crude production edged up by 79,000 barrels a day to 9.5 million barrels, its highest level since July 2015.
However, bulls took some heart in that U.S. energy firms cut rigs drilling for new oil for a second week in three.
U.S. crude futures gained 0.29% to $48.80 by 7:07AM ET (11:07GMT), while Brent oil slipped 0.04% to $52.71.