Wall Street set to open lower as weak China data weighs

By Yashaswini Swamynathan

REUTERS - Wall Street was set to open lower on Thursday as investors fretted about China's weak economic data and the prospects of an interest rate hike by the end of the year.

Data showed China's exports fell 10 percent in September, far worse than the markets had expected, while imports unexpectedly shrank, reviving concerns about the health of the world's second-largest economy.

The Fed on Wednesday released the minutes of its last rate-setting meeting, which showed that several policymakers felt a rate hike was warranted "relatively soon" if the U.S. economy continued to strengthen.

The number of Americans filing for unemployment benefits held at a 43-year low last week, pointing to sustained labor market strength, a report showed on Thursday.

Traders see little chance of a rate increase during the Fed's November meeting, which falls days before the Nov. 8 U.S. presidential election. However, the odds for a December move are at 70 percent, according to the CME Group's FedWatch tool.

U.S. stock index futures were at one-month lows, tracking declines in Asian and European stocks.

Prices of gold, a safe haven, ticked higher, while the dollar, which is near a seven-month high, was trading at session lows.

"China's trade data spooked global markets and it comes at a time when we have a Federal Reserve that wants to raise rates soon," said John Brady, senior vice president at R.J. O'Brien & Associates in Chicago.

"It's a modest risk-off sentiment today."

Wall Street, where riskier assets have found little favor in the past weeks, closed slightly higher on Wednesday as the Fed minutes did little to alter traders expectations of a rate hike in December.

Market valuations will be put to test during the earnings season, with profits of S&P 500 companies currently expected to fall 0.7 percent, according to Thomson Reuters data.

The benchmark S&P 500 index is trading at 17 times forward earnings, compared with its 10-year median of 14.7, according to StarMine data.

Dow e-minis were down 111 points, or 0.61 percent at 8:26 a.m. ET (1226 GMT), with 40,498 contracts changing hands.

S&P 500 e-minis were down 13.75 points, or 0.65 percent, with 248,441 contracts traded.

Nasdaq 100 e-minis were down 32.5 points, or 0.68 percent, on volume of 38,308 contracts.

Deutsche Bank's Frankfurt-listed stock fell 3 percent after sources told Reuters that the bank was introducing a hiring freeze as it seeks to cut costs amid a deep strategic overhaul.

The bank's U.S. shares were down 2.7 percent in heavy premarket trading.

Big U.S. bank stocks, including Morgan Stanley, JPMorgan, Bank of America and Citigroup, fell between 0.9 percent and 1.25 percent.

Wells Fargo shares rose 1.26 percent after Chief Executive John Stumpf abruptly departed on Wednesday following a sales scandal that damaged the reputation of the once most valuable bank in the world.

Marriott Vacations plunged nearly 10 percent after reporting a sharp decline in quarterly revenue from Europe.

Wynn Resorts is scheduled to report after market close on Thursday, while U.S. banks start reporting from Friday.

(Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Anil D'Silva)