North American markets are set to start the week in negative territory, as fresh concerns over the Chinese economy, and the spending cuts that are threatening to slow the U.S. economy, keep investors cautious.
U.S. stock futures and European equities are down this morning, with China seeing the harshest selling overnight after the country's latest attempt to cool housing prices combined with new economic data showing a slowdown in growth in its non-services sector. The Shanghai composite index was down 3.6 per cent, its worst sell-off since August 2011, according to Marketwatch.
The Chinese government announced new property-buying restrictions that include higher down payments and mortgage rates on second homes in certain cities, while also imposing a 20-per-cent capital gains tax on sales of existing sales. Meanwhile, China's services sector grew last month at the slowest pace since September, with the non-manufacturing purchasing managers' index dropping to 54.5 in February from 56.2 in January. That was still above the 50-level that separates growth and contraction.
In the U.S. this weekend, there was little to signal that the Republicans and Democrats were any closer on reaching a deal to scale back the $85-billion in spending cuts that started kicking in on Friday. The U.S. Congressional Budget Office has estimated the cuts will slow gross domestic product growth by 0.6 of a percentage point this year, and President Barack Obama's aides and congressional leaders have suggested the spending curtailments could continue for weeks, if not longer. Negotiations could become wrapped into upcoming talks that will be aimed at keeping federal agencies running beyond March 27, as well as debt ceiling adjustments that need to be made later this year.
Markets are also keeping close tabs on the political situation in Italy following the election last month that resulted in a hung government. Leaders there are struggling to navigate a path to cooperation but another election appears likely to be on the horizon.
Now, here's a look at what else is going on this morning.
MARKETS:
Equities:
U.S. futures: S&P 500 -0.2 per cent; Dow -0.1 per cent; Nasdaq -0.3 per cent
Hong Kong's Hang Seng index -1.50 per cent
Shanghai composite index -3.67 per cent
Japan's Nikkei +0.39 per cent
London's FTSE 100 -0.64 per cent
Germany's DAX -0.68 per cent
France's CAC 40 -0.29 per cent
Italy's FTSE MIB -1.22 per cent
Commodities:
WTI (Nymex Apr) -0.17 per cent at $90.53 (U.S.) a barrel
Gold (Comex Apr) +0.37 per cent at $1,578.10 (U.S.) an ounce
Copper (Comex May) -0.10 per cent at $3.50 (U.S.) a pound
Currencies:
Canadian dollar down 0.0027, or 0.27 per cent, at $0.9718 (U.S.)
ECONOMIC INDICATORS TO WATCH:
No major reports scheduled.
STOCKS TO WATCH:
Research In Motion Ltd. will be in focus after Yahoo Inc. said it was shutting its BlackBerry app for smartphones. Also, Canaccord Genuity this morning said it reduced its February-quarter sales estimates too much for the BlackBerry 10 Z10 smartphone. It increased its sales forecast to 800,000 from 300,000. Canaccord maintained a "sell" rating and $9 (U.S.) price target, saying its latest surveys are seeing steady but still modest sales for the Z10.
Aurizon Mines Ltd. has received a friendly $796-million takeover offer from Hecla Mining Co. for $4.75 per share, 40 cents per share above Aurizon's closing stock price on Friday. The offer is also 10 cents per share above a hostile takeover bid for Aurizon from Alamos Gold Inc. Aurizon shares are up 4 per cent in the premarket.
Las Vegas Sands Corp. said it probably violated the U.S. foreign Corrupt Practices Act, which prohibits improper business payments outside the U.S. Its shares are down 1.6 per cent in the premarket.
Earnings today include HSBC Holdings PLC.
THIS MORNING'S TOP INVESTING READS ON THE WEB:
Investors in February reduced their bearish stock bets to the lowest level since at least 2007.
Affluent borrowers are signing up for the same type of mortgage that pushed many homeowners into foreclosure just a few years ago.
Warren Buffett's favourite dividend stocks.
Why gold's long-term gold run isn't over - it's just taking a break.
Goldman Sach's senior U.S. investment strategist thinks the stock market rally isn't over.
The last six times Apple CEO Tim Cook has talked, the stock has dropped.
Investors' most serious mistake: trying to time the market.
Hedge fund legend Stanley Druckenmiller sees a storm on the horizon.
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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
Darcy Keith