European stocks and U.S. stock futures are under pressure this morning amid renewed worries over Italy's problematic political state, which has erected yet another road block for the S&P 500 to cruise to record highs.
Markets headed south after Pier Luigi Bersani, the head of Italy's centre-left alliance, reportedly turned down the idea of forming a coalition government. Recent elections in Italy were inconclusive and required a coalition of political parties to govern. The issue had faded into the background over the last few weeks, but prospects that Italy could be heading toward another election, creating uncertainty over how the nation will pull itself out of its debt woes, continues to undermine confidence in the euro zone.
Market players will be monitoring the situation in Cyprus today as well. The country's banks are expected to reopen Thursday, and later today Cypriot authorities are expected to detail capital controls that are aimed at staving off a run on its banks. It's a rare step for a euro zone country to be taking, but the island nation's bailout earlier this week has calmed contagion fears for now.
With these developments playing out, it's not surprising that confidence is the euro zone economy is taking a hit. New data today showed that economic sentiment in the 17 countries using the euro decreased by a worse-than-expected 1.1 points in March to 90.0. That followed fourth straight months of gains.
The S&P 500, the U.S. benchmark index, closed Tuesday just a couple points shy of its record closing high of 1,565.15 from October of 2007. It has come within spitting distance of that level several times in recent days, but has always pulled back just in time.
This morning, it appears that resistance level will remain intact, at least at the open. The TSX will also have the added drag of lower prices for key commodities.
Now, here's a closer look at what else is going on this morning and what's to come.
MARKETS:
Equities:
U.S. futures: S&P 500 -0.5 per cent; Dow -0.5 per cent; Nasdaq -0.5 per cent
Hong Kong's Hang Seng index +0.69 per cent
Shanghai composite index +0.14 per cent
Japan's Nikkei +0.18 per cent
London's FTSE 100 -0.72 per cent
Germany's DAX -1.18 per cent
France's CAC 40 -1.80 per cent
Italy's FTSE MIB -1.68 per cent
Commodities:
WTI (Nymex May) -0.58 per cent at $95.78 (U.S.) a barrel
Gold (Comex Jun) -0.25 per cent at $1,593.20 (U.S.) an ounce
Copper (Comex May) -0.31 per cent at $3.43 (U.S.) a pound
Currencies:
Canadian dollar up 0.0010, or 0.10 per cent, at $0.9846 (U.S.)
ECONOMIC INDICATORS TO WATCH:
Statistics Canada said the annual inflation rate more than doubled to 1.2 per cent in February, a higher rate than the 0.8 per cent rise expected by economists.
(10 a.m. ET) U.S. releases its pending home sales index for February, forecast to decline 0.7 per cent.
STOCKS TO WATCH:
Aviation experts and government officials say the Federal Aviation Administration may shorten the permitted flying time of Boeing's 787 on certain routes when it approves a revamped battery system. Boeing shares are down 0.7 per cent in the premarket.
Earnings today include: AGF Management Ltd. and Exfo Inc.
THIS MORNING'S TOP INVESTING READS ON THE WEB:
China is slamming Apple's customer service.
The case for staying in gold.
Global financial stress, a coincident indicator for global stock prices, is flaring up again in the wake of the crisis in Cyprus. And that's bad news for stocks.
IPO fundraising has jumped 50 per cent this year globally.
Nearly half of U.S. workers didn't even notice they were hit with higher payroll taxes this year. But that doesn't mean it won't eventually hurt U.S. consumer confidence.
The best stock picker you never knew.
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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