U.S. and Canadian stocks opened with steep losses, moving in sympathy with overseas markets, as investors become increasingly concerned with the possible withdrawal of central bank monetary stimulus at a time when China's economic growth rate is slowing.
A continued rise in long-term bond yields is also hurting sentiment for stocks, particularly income-producing ones that have been highly popular during low interest rates of recent years. The yield on the 10-year U.S. Treasury note was near 2.25 per cent, up 0.09 of a percentage point and a 14-month high. Bond yields were also higher in Europe and Canada.
In early trading, the S&P/TSX composite index was down 126 points, or 1 per cent, at 12,255.95.
Lululemon Athletica Inc. was a notable decliner, plunging 15 per cent at the open after it announced the planned departure of its CEO late Monday. Analysts are already chopping their price targets on the stock and at least two of them - from UBS and Sterne Agee - have downgraded the company to the equivalent of hold ratings from buy.
The resource-heavy makeup of the TSX isn't helping matters, as major commodities are all lower. The July crude oil futures contract in New York was down $1.50, or 1.5 per cent, at $94.26 (U.S.) per barrel and copper was probing fresh one-month lows, off by 1.6 per cent at $3.19 per pound.
Even gold, which often benefits from haven money flows during risk-averse times, was licking its wounds, trading near three-week lows. The August futures contract was down $15.30, or 1.1 per cent, at $1,370.70 per ounce. The move comes despite weakness in the greenback this morning, normally supportive of the gold price - a development that illustrates investors' unease right now with the values of hard assets.
In New York, the S&P 500 was down 16 points, or 0.9 per cent, at 1,627 and the Dow Jones industrial average was down 129 points, or 0.8 per cent, at 15,111.
European shares were trading near their session lows as the North American trading day got underway. London's FTSE 100 and Germany's Dax were both down 1.7 per cent and markets in France and Italy were posting losses of about 2 per cent.
The selloff kicked off in Japan once again, where its central bank announced it will make no changes to its monetary policy, disappointing some market players who were betting the Bank of Japan would extend the duraction of its ultra-low interest rates to banks. The Nikkei lost 1.4 per cent as the yen moved sharply higher - not a welcome development for the country's exports. The U.S. dollar fell to about 96.78 yen from 98.64 late Monday in North America.
Sentiment in Asia had already been bruised by several disappointing economic reports this past weekend in China, including a lacklustre showing on exports.
In Europe today, investors are keeping a close eye on a supreme court hearing in Germany, which will be deciding on whether European Central Bank President Mario Draghi was within his legal rights last year when he announced a program to buy bonds to prop up the euro-zone economy - a policy known as Outfight Monetary Transactions. Some market participants are fearful that the bond buying program could be capped to a certain amount.
That issue of possible central bank withdrawal of stimulus will be at the forefront of the market's attention here in North America as well today, as investors continue to debate whether the U.S. Federal Reserve may be close to tapering its own bond-buying program.
Here's a look at some other stocks moving on news today:
Kinross Gold Corp. shares are down 4 per cent after the company announced late Monday that it is halting development at its Fruta del Norte gold project in Ecuador after failing to reach an agreement with the government over a windfall tax on revenues. Canaccord Genuity downgraded the stock to "hold" from "buy" on the news.
Dole Food Co. shares jumped 20 per cent to $12.25 after David H. Murdock offered to buy the companhy at $12 per share in cash. It's an 18 premium to the closing price Monday.
SoftBank Corp. said it agreed with Sprint Nextel Corp to raise its offer for the U.S. wireless carrier to $21.6-billion from $20.1-billion. Sprint was up 2.1 per cent.