A nasty day in global markets is taking shape, as investors continue to fret over the possible withdrawal of central bank monetary stimulus at a time when China's growth rate is slowing and long-term interest rates are rising.
U.S. and Canadian stock futures are down nearly 1 per cent this morning, with most key European and Asian markets down more than 1.5 per cent. Commodities are sharply lower as well, suggesting the selloff on the TSX could even be sharper than on Wall Street. The 10-year U.S. Treasury yield has hit another 14-month high, and the yield on its Canadian counterpart is moving up in sympathy.
Adding to what appears will be a tough day for the TSX will be Lululemon Athletica Inc., which is set for one of its biggest tumbles in its history after it announced the planned departure of its CEO late Monday.
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 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 will be 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.
Now, here's the detailed rundown of markets this morning and what's to come.
Futures: S&P Toronto -0.96 per cent; S&P 500 -0.85 per cent; Dow -0.75 per cent; Nasdaq -0.85 per cent
Hong Kong's Hang Seng -1.20 per cent
Shanghai composite index Closed for holiday
Japan's Nikkei -1.45 per cent
London’s FTSE 100 -1.40 per cent
Germany’s DAX -1.42 per cent
France's CAC 40 -1.56 per cent
Italy's FTSE MIB -1.78 per cent
WTI crude oil (Nymex July) -0.77 per cent at $95.03 (U.S.) a barrel
Gold (Comex Aug) -1.28 per cent at $1,368.60 (U.S.) an ounce
Copper (Comex July) -1.47 per cent at $3.19 (U.S.) a pound
Canadian dollar down 0.0046, or 0.47 per cent, at $0.9764 (U.S.)
U.S. 10-year Treasury yield 2.21 per cent, up 0.05
Canada 10-year government bond yield 2.20 per cent, up 0.06
ECONOMIC INDICATORS TO WATCH:
No major reports scheduled.
STOCKS TO WATCH:
Lululemon Athletica Inc. shares are down 13 per cent in the premarket after announcing late Monday that CEO Christine Day will step down after the board names a successor. Analysts are already chopping their price targets on the stock and at least two of them - from UBS and Sterne Agree - have downgraded the company to "neutral" ratings.
Kinross Gold Corp. shares are down 6 per cent in the premarket after announcing 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 more than 15 per cent in the premarket 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.
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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.