By Peter Nurse
Investing.com - U.S. stocks are set to open sharply lower Monday, with investors fretting about allegations the banking sector ignored warnings over potential illegal activities, soaring coronavirus cases and renewed political tensions.
At 7:05 AM ET (1105 GMT), S&P 500 Futures traded 53 points, or 1.6%, lower, the Dow Futures contract fell 535 points, or 1.9%, while Nasdaq 100 Futures dropped 157 points, or 1.4%.
The benchmark S&P 500 is on a three-week losing streak, closing Friday below its 50-day moving average for the first time since April. These major stock indexes are having their worst month since March.
The banking sector is expected to open sharply in the red following reports that some of the major names in the sector continued to do business for years with entities they had already flagged to regulators as being suspicious.
Banks including Barclays (LON:BARC), Deutsche Bank (DE:DBKGn), HSBC Holdings (NYSE:HSBC) and Standard Chartered (OTC:SCBFF) fell in European trade, and the likes of JPMorgan (NYSE:JPM) and Bank of New York Mellon (NYSE:BK) are set to follow suit.
Adding to the woes are concerns emanating from Europe of a second wave of Covid-19 cases, with the U.K. talking about a second national lockdown. This hit local travel and leisure shares hard, and the likes of American Airlines (NASDAQ:AAL), Delta Air Lines (NYSE:DAL), Carnival (NYSE:CUK) and Royal Caribbean (NYSE:RCL) were sharply lower premarket.
The U.S. reported 39,844 new coronavirus cases Sunday and was closing in on 200,000 deaths, and at least one more cycle of the virus is expected in the fall and winter, the U.S.’s former FDA Commissioner Scott Gottlieb said.
Federal Reserve Chair Jerome Powell and Treasury Secretary Steven Mnuchin are set to be questioned by lawmakers Tuesday on the need for more stimulus to shore up the U.S. economy’s recovery.
This comes as the death of Ruth Bader Ginsburg has resulted in fresh conflict over who nominates her replacement on the Supreme Court, souring the political climate and making compromise over a new stimulus bill more unlikely.
Elsewhere in corporate news, President Donald Trump said over the weekend he supported a deal in principle that would allow TikTok to continue to operate in the United States, helping Oracle (NYSE:ORCL) and Walmart (NYSE:WMT), who will own stakes in the new U.S.-listed company.
Additionally, Nikola (NASDAQ:NKLA) stock was sharply lower after Trevor Milton, the founder of electric truck-maker, stepped down as chairman in the wake of fraud allegations.
Oil prices edged lower Monday despite another weather pattern emerging to threaten output in the Gulf of Mexico. However, the uptick of Covid-19 cases, not only in the U.S. but globally, remains a serious threat to the recovery of demand for oil.
U.S. crude futures traded 1.8% lower at $40.59 a barrel, while the international benchmark Brent contract fell 1.7% to $42.42.
Elsewhere, gold futures fell 1.3% to $1,937.65/oz, while EUR/USD traded 0.4% lower at 1.1792.