Tough talk on Syria from U.S. Secretary of State John Kerry has investors backing away from equity markets this morning and moving towards to the perceived haven of gold.
U.S. and Canadian stock futures are well into negative territory and many European indexes are suffering losses greater than 1.5 per cent, with gold rising more than 1 per cent.
Mr. Kerry said Monday that Syria will be held accountable for using chemical weapons, igniting concern that U.S.-led military action may be nearing. The heightened geopolitical concerns in the Middle East may be yet another headwind for equity markets as the seasonal weak month of September approaches. It has also raised concern about the disruption of oil supplies from the region. Brent crude hit a high of $112.60 (U.S.) per barrel early today in London, its highest level since early April.
United Nations investigators are gathering information from the areas where the weapons were allegedly used. The Syrian government continues to deny it used chemical weapons.
Markets have another concern this morning as well, after the Wall Street Journal reported late Monday that the U.S. government will hit the debt ceiling in the middle of October, preventing Washington from borrowing money unless Congress votes to raise the ceiling. The prediction came from Treasury Secretary Jacob Lew and his timeframe for hitting the debt ceiling was earlier than most private forecasts.
U.S. home prices and consumer confidence data will be monitored later today for clues on the direction of U.S. monetary policy and when the U.S. is likely to start tapering its asset-purchasing program.
Here in Canada, the focus will be on the banking sector. Both Bank of Nova Scotia and Bank of Montreal have reported earnings this morning ahead of Street estimates.
Now, here's a closer look at what's going on this morning and what's to come.
MARKETS:
Equities:
Futures: S&P 500 -0.71 per cent; Dow -0.60 per cent; Nasdaq -0.88 per cent; S&P Toronto -0.36 per cent
Hong Kong's Hang Seng -0.59 per cent
Shanghai composite index +0.36 per cent
Japan's Nikkei -0.69 per cent
London's FTSE 100 -0.79 per cent
Germany's DAX -1.59 per cent
France's CAC 40 -1.53 per cent
Commodities:
WTI crude oil (Nymex Oct) +2.38 per cent at $108.45 (U.S.) a barrel
Gold (Comex Dec) +1.76 per cent at $1,417.50 (U.S.) an ounce
Copper (Comex Dec) -0.23 per cent at $3.32 (U.S.) a pound
Currencies:
Canadian dollar at 94.97 (U.S.), down 0.0025 from yesterday's North American close.
U.S. dollar index up 0.04 at 81.45
Bonds:
U.S. 10-year Treasury yield 2.77 per cent, down 0.02
ECONOMIC INDICATORS TO WATCH:
The S&P Case-Shiller home price index for June rose 2.2 per cent from May. Year-over-year, prices were up 12.1 per cent.
(10 a.m. ET) U.S. releases consumer confidence for August, forecast to fall to 78.0 from July's 80.3.
(12:45 p.m. ET) Bank of Canada Deputy Governor John Murray speaks on "Exits, Spillovers and Monetary Policy Independence."
STOCKS TO WATCH:
Bank of Montreal reported a 17-per-cent rise in third-quarter profit, with earnings per share of $1.68 beating Street expectations for $1.53. Shares are up 0.2 per cent in very thin U.S. premarket trading.
Bank of Nova Scotia reported adjusted third-quarter earnings of $1.39, beating estimates of $1.30. The bank raised its quarterly divided by two cents to 62 cents per share. Shares are up 0.3 per cent in very thin U.S. premarket trading.
Tiffany & Co. reported net income of 83 cents per share, 9 cents more than analysts expected, as Chinese sales held in surprisingly strong. The company now expects a profit of $3.50 to $3.60 per share this fiscal year, 7 cents more than its previous forecast range. Shares are up 2.6 per cent in the U.S. premarket.
J.C. Penney shares are down about 2 per cent in the premarket after Bill Ackman said late Monday that he was selling his stake in the retailer.
Other earnings today include: Brown Shoe Co. Inc.; Dycom Industries Inc.; Movado Group Inc.; and TiVo Inc.
THIS MORNING'S TOP INVESTING READS ON THE WEB:
CNBC is quoting a source as saying Larry Summers will likely be named chairman of the Federal Reserve in a few weeks.
Steve Ballmer's announced departure as CEO of Microsoft wasn't as planned, nor as smooth, as portrayed.
Four stocks both Warren Buffett and insiders are betting on.
Fund managers have started adding exposure to commodities.
Trading momentum, often cited for keeping stock rallies going for a prolonged period, extends to the government bond market as well.
Templeton executive Mark Mobius believes emerging markets may be oversold.
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The premarket report is constantly updated to reflect the latest news developments and market moves. For instant headlines on breaking economic and corporate news in the premarket, follow Darcy Keith on Twitter at @eyeonequities. You can also be notified using our dashboard feature when new articles appear from this author. Read more on using this feature here.
Darcy Keith