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Tuesday 05 July 2016 1:47 pm

Before the bell: What you need to know before the US market open

By: Billy Bambrough

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The Bank of England has slashed its capital requirements for UK banks, the pound is at a new 31 year low, and Australia's central bank has held interest rates unchanged at 1.75 per cent.

Here's what you need to know before the US open at 2.30pm London time. 

US futures are pointing south after coming back from a long 4 July weekend.

The S&P is off by 0.68 per cent, while the Nasdaq is 0.68 per cent down and the Dow is 0.61 per cent lower. The US 10-year yield is lower by seven basis points at 1.38 per cent.

Asian markets ended the session in the red and European markets are sliding lower in early trading. The FTSE 100 has climbed back into the green after dipping 0.7 per cent.

All eyes on the UK…

The eyes of the investor world remain locked on the UK as Bank of England governor Mark Carney is put to the test following the UK's shock vote to quit the European Union. 

The Bank of England's Financial Stability report calling Brexit "the most significant near-term domestic risk to financial stability" has pressured sterling to a loss of one per cent so far today to a value of $1.3150, its weakest since September 1985.

Read more: Aviva becomes the second property fund to suspend trading in as many days

Carney meanwhile has slashed the Bank of England's capital requirements for UK banks, paving the way for an extra £150bn to be pumped into the UK economy, in its latest efforts to stop the UK spiralling into a post-referendum crisis.

In other central bank news, the Reserve Bank of Australia held its key interest rate unchanged at 1.75 per cent, as expected. The RBA said it would be watching both growth and inflation data closely.

Stocks to watch

Tesla is down premarket after it was hit by a double whammy of bad news. 

A deadly crash involving its autopilot technology last week has turned some investors off the business, while deliveries of cars in the second quarter were lower than anticipated.

In Europe banks are in the limelight. The MSCI European Financials index is down 1.6 per cent.

Read more: Housebuilders suffer second day of share price falls in a row

Italy's Banca Monte dei Paschi has plunged more than seven per cent, after the European Central Bank told it to reduce its exposure to bad loans. Italian banks have been hit hard by the market turmoil that followed the Brexit vote.

Companies reporting

Very little corporate data out today, though tomorrow we'll hear from pharmacists Walgreens Boots Alliance and Cogeco Communications.

Economic data due

US factory orders and durable goods are out 3pm London time, but before that the ISM New York will be released at 2:45pm. 

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