Wall Street set to open higher ahead Trump's budget plan

By Tanya Agrawal

(Reuters) - U.S. stocks looked set to open higher on Tuesday, shrugging off a deadly bomb blast in Britain and ahead of U.S. President Donald Trump's first full budget plan that is aimed at slashing government spending and trimming the deficit.

Trump is set to propose a raft of politically sensitive cuts, including to healthcare and food assistance programs for the poor, with the aim of chopping government spending by $3.6 trillion and balancing the budget over the next decade.

The plan also includes selling off half the country's huge oil stockpile, a proposal that weighed on crude oil prices as it threatened a future glut even as OPEC and its allies cut output to try and tighten the market. [O/R]

Congress holds the federal purse strings and often ignores presidential budgets, which are proposals and may not take effect in its current form.

"In the U.S. all eyes are on Trump's budget proposal. The budget will not pass in its current state but people will keep an eye on any sort of indication of corporate tax reform as well as infrastructure spending," said Nadia Lovell, US Equity Strategist at J.P. Morgan Private Bank in New York.

U.S. futures slipped slightly on Monday evening, before recovering, on news of the suicide attack that killed at least 22 people and wounded 59 at a pop concert in the English city of Manchester.

European stocks edged up after a sluggish start on Tuesday, with the region's shares made gains as the latest economic data made for some encouraging reading.

"Numbers are coming in off the Eurozone so that helped prop the European markets up a bit and that's seeding into the U.S.," said Lovell.

Dow e-minis were up 46 points, or 0.22 percent, with 28,878 contracts changing hands at 8:30 a.m. ET (1230 GMT).

S&P 500 e-minis were up 3.75 points, or 0.16 percent, with 183,854 contracts traded.

Nasdaq 100 e-minis were up 14.25 points, or 0.25 percent, on volume of 32,564 contracts.

Wall Street closed higher on Monday boosted by technology shares and by defense companies, which gained after the United States and Saudi Arabia signed a $110 billion arms deal.

The deal was struck during Trump's visit to Saudi Arabia over the weekend, a trip the White House hopes will shift focus away from domestic controversies such as the president's firing of the former Federal Bureau of Investigation chief and probes into his administration's possible links to Russia.

"Much of Trump "reflation" trade has been unwound and in order for the S&P to move beyond 2,400 we need to see something on the policy front, without that any movement beyond 2,400 will be difficult to sustain," Lovell added.

Among stocks, shares of Toll Brothers rose 3.8 percent to $39.49 after the luxury homebuilder reported a 40 percent rise in quarterly profit.

U.S.-listed shares of Nokia were up 6.6 percent at $6.62 after the company settled a patent dispute with Apple. Apple was 0.4 percent higher at $154.60.

Autozone fell 7.7 percent to $608.65 after the company's quarterly results came in below expectations.

(Reporting by Tanya Agrawal; Editing by Savio D'Souza)