Worries over the U.S. fiscal cliff continue to hold markets hostage, with North American stocks set to open flat amid few signs that a deal to avert it is imminent.
U.S. stock index futures are just slightly positive, and markets overnight were mixed, as traders are reluctant to place new positions while the uncertainty continues.
On Monday, the Democrats rejected a Republican proposal for averting the more than $600-billion (U.S.) in spending cuts and tax increases set to take hold Jan. 1 that threaten to slow economic growth in the world's biggest economy.
House Speaker John Boehner offered $1.4-trillion in spending cuts and $800-billion in new revenue by limiting tax breaks and reducing deductions. President Barack Obama has proposed $1.6-trillion in tax increases and $600-billion in spending cuts.
The two sides, in other words, are far apart. Most on the Street believe a deal of some kind will eventually materialise, but Washington's penchant for brinkmanship is creating enough uncertainty to keep markets on edge.
Those who set monetary policy are also worried. Australia's central bank cited the fiscal cliff as one of several factors that pose risks for its economy as it announced a one-quarter point cut in its benchmark lending rate today.
The Bank of Canada didn't make any adjustments to interest rates here this morning, but cited the fiscal cliff as one of the threats to the global economy. It also suggested the next move on interest rates, whenever that comes, will be up.
There aren't any economic reports out today to distract traders, with the main event of the week arriving Friday, when the U.S. releases its monthly jobs data.
Now, here's a look at what else you need to know this morning.
MARKETS:
Equities:
U.S. futures: S&P 500 +0.1 per cent; DJIA +0.1 per cent; Nasdaq +0.1 per cent
Hong Kong's Hang Seng index +0.15 per cent
Shanghai composite index +0.78 per cent
Japan's Nikkei -0.28 per cent
London's FTSE 100 +0.10 per cent
Germany's DAX +0.29 per cent
France's CAC 40 +0.74 per cent
Commodities:
WTI (Nymex Jan) -0.34 per cent at $88.79 (U.S.) a barrel
Gold (Comex Feb) -0.79 per cent at $1,707.50 (U.S.) an ounce
Copper (Comex Mar) +0.03 per cent at $3.66 (U.S.) a pound
Currencies:
Canadian dollar up 0.0007, or 0.07 per cent, at 1.0059 (U.S.)
STOCKS AND ECONOMIC INDICATORS TO WATCH:
Bank of Montreal's profits rose 41 per cent in the fourth quarter. Adjusted to exclude one-time items, BMO made $1.65 a share, easily surpassing analysts' forecasts for $1.42 a share.
Other earnings today include Canadian Western Bank and Toll Brothers Inc.
THIS MORNING'S TOP INVESTING READS ON THE WEB:
Why China-related stocks are looking like bargains.
The fast-paced, high-stakes tech sector is now the biggest contributor of stodgy old dividends in the Standard & Poor's 500-stock index. That doesn't mean income-oriented investors should drop their guard, however.
One of the hedge funds run by John Paulson, whose prescient bets against housing where chronicled in the book "The Greatest Trade Ever," is on track to be the second worst performer of 2012 among the universe of funds tracked by HSBC. Last year, it was the worst.
The debate on the potential consequences of the U.S. going over the fiscal cliff rages on, but one thing is already clear: Investors in the technology sector are staring some ugly earnings surprises in the face as corporate spending is delayed.
Four reasons why U.S. companies are still reluctant to hire.
In an unusual occurrence, the market is saying Exxon Bonds are safer than the U.S. government. And in many ways, the market is right.
Whatever the market historians say about the 2012 stock market years from now, they will certainly have to at least mention how difficult it was for those who practice tactical asset allocation. Not just difficult, actually it was a graveyard.
Investors' infatuation with high-yield-bond funds might have finally run its course, and that could be a sign of an inflection point in fixed-income investing.
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For instant headlines on breaking economic and corporate news in the premarket, follow Darcy Keith on Twitter at @eyeonequities
Darcy Keith