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US pre-open: Futures in the red following Trump's landslide caucus victory

(Sharecast News) - Wall Street futures were in the red ahead of the bell on Tuesday as traders returned from the Martin Luther King Jr Day break to more corporate earnings and headlines from the Republican Party's Iowa caucus. As of 1250 GMT, Dow Jones futures were down 0.33%, while S&P 500 and Nasdaq-100 futures had the indices opening 0.40% and 0.49% weaker, respectively.

The Dow closed 118.04 points lower on Friday as the first batch of quarterly earnings came rolling in.

Corporate earnings will again be in focus on Tuesday, with Goldman Sachs reporting its lowest annual profit since 2019, down 24% year-on-year at $8.5bn, as a pullback from retail banking compounded a slowdown in its core business. Morgan Stanley was also slated to report earnings on Tuesday.

Elsewhere, the yield on the benchmark 10-year Treasury note rose six basis points early on Tuesday and was sitting just above the key 4% level. The two-year and 30-year notes were also higher after European central bankers talked down expectations for interest rate cuts in the immediate future.

Also drawing an amount of investor attention, Donald Trump won the Republican caucus in Iowa by a landslide, claiming 51% of the vote for the biggest win in history. He told supporters: "The big night is going to be in November, when we take back our country." Following the news, European Central Bank president Christine Lagarde warned that a second term in office for the former president would undoubtedly represent a global threat.

AJ Bell's Russ Mould said: "Equity markets initially dreaded the idea of a Trump victory in 2016 and although the Dow Jones Industrials ultimately rose during his four-year term, despite trade and tariff frictions with much of the world, investors will be watching out for policy statements from all the leading Republican contenders, even if Trump is the clear front runner at this early stage.

"A repeat of 2020's Biden-Trump presidential contest is on the cards according to initial opinion polls. If they are accurate then America will get its first presidential rematch since 1956. Biden may well welcome that precedent, since that was when Dwight Eisenhower beat Adlai Stevenson for the second time to retain the Presidency (even if the two-time victor was a Republican). Electoral rematches are rare, but investors may also look to history to see what the election may mean this time around, even in the knowledge that the past is no guarantee for the future."

On the macro front, January's New York Empire State manufacturing index will be published at 1330 GMT, while Federal Reserve banker Christopher Waller will deliver a speech at 1600 GMT.

Reporting by Iain Gilbert at Sharecast.com

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Important information: This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice. When you are thinking about investing in shares, it’s generally a good idea to consider holding them alongside other investments in a diversified portfolio of assets. Past performance is not a reliable indicator of future returns.

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