Investors could be facing another day of losses in North America amid a resurgence in worries over how the end of the Federal Reserve's bond-buying program will rattle markets later this year.
Japan was a particular ugly spot overnight, with the Nikkei stock average plunging 4 per cent, its worst one-day loss on a percentage basis in nearly two months. The retreat came as the greenback weakened considerably against the yen, falling as low as ¥96.74 from above the ¥98 level on Tuesday. The currency movement suggests a deteriorating profit picture for Japan's exporters - a key component of its economy. Sony Corp. fell 4.3 per cent.
In addition to concerns about the withdrawal of global monetary stimulus, Japanese investors were reacting to worries that Chinese trade growth may slow further throughout the second half of his year.
Comments Tuesday from Fed Bank of Chicago President Charles Evans continued to keep traders anxious over the looming end of quantitative easing measures, saying that he would not rule out a decision to begin trimming bond purchases next month. Today, there could be further comments on the matter from Fed Bank of Cleveland President Sandra Pianalto, who speaks on monetary policy and the economic outlook at 130 p.m. (ET).
Data Tuesday showing an unexpected narrowing in the U.S. trade deficit had some economists upwardly revising their GDP estimates for this year - which only feeds speculation that the Fed will soon be in a position to withdraw some of its extraordinary stimulus measures. Those concerns, plus profit-taking after several recent consecutive record highs in the Dow and S&P 500 index, have market players reluctant to broaden equity exposure, although market movements may be a bit exaggerated by thin volumes, as many traders are away on holiday.
Elsewhere this morning, the British pound saw extremely volatile trade after newly installed Bank of England Governor Mark Carney made the unprecedented move to peg interest rates to the country's unemployment rate. The pound fell as low as $1.5196 (U.S.) before recovering to $1.5419 - which actually was a little stronger than trading levels late Tuesday.
Now, here's a closer look at what's going on and what's to come later today.
MARKETS:
Equities:
Futures: S&P 500 -0.34 per cent; Dow -0.37 per cent; Nasdaq -0.26 per cent; S&P Toronto -0.27 per cent
Hong Kong's Hang Seng -1.53 per cent
Shanghai composite index -0.66 per cent
Japan's Nikkei -4.00 per cent
London's FTSE 100 -0.67 per cent
Germany's DAX -0.41 per cent
France's CAC 40 +0.01 per cent
Commodities:
WTI crude oil (Nymex Sep) +0.19 per cent at $105.50 (U.S.) a barrel
Gold (Comex Dec) -0.46 per cent at $1,276.60 (U.S.) an ounce
Copper (Comex Sep) -0.46 per cent at $3.16 (U.S.) a pound
Currencies:
Canadian dollar at 95.85 (U.S.), versus 96.38 at yesterday's North American close.
U.S. dollar index down 0.06 at 81.54
Bonds:
U.S. 10-year Treasury yield 2.64 per cent, unchanged
ECONOMIC INDICATORS TO WATCH:
Canadian building permits in June fell 10.3 per cent from May, much steeper than the 2.8 per cent decline predicted by economists.
STOCKS TO WATCH:
First Solar Inc. was down nearly 10 per cent in premarket trade after the solar-panel maker reported an unexpected fall in profits.
Zillow Inc. was down 9 per cent in the premarket after the U.S. real estate website reported a second-quarter loss on higher costs.
Walt Disney Co. was down about 2 per cent in the premarket as it reported late Tuesday quarterly profits 2 cents per share better than Street estimates but advertising revenue shrunk at the ABC TV network.
Air Canada reported an adjusted profit of 41 cents per share, much better than Street estimates for 10 cents per share in profit. Revenue of $3.06-billion also beat estimates for $3.02-billion.
Valeant Pharmaceuticals International Inc. posted a second-quarter profit of $11-million, up from a $21.6-million loss a year earlier as revenue rose to $1.1 billion. The company, which completed the purchase of Bausch + Lomb this week, also said it was raising its 2013 guidance.
Time Warner Inc. reported adjusted profit of 83 cents per share in its most recent quarter, beating the Street estimate of 76 cents.
Brookfield Property Partners L.P. and its partners are buying a network of 75 industrial distribution faculties operating in 12 U.S. states in a deal valued at $1.1-billion.
Other earnings today include: Agrium; Canexus Corp.; Davis + Henderson; Dundee International; Franco-Nevada; High Liner Foods; Sun Life Financial; Duke Energy Corp.; Groupon Inc.; Novatel Wireless Inc.; Mondelez International Inc.; SP Bancorp Inc.; and Westar Energy Inc.
THIS MORNING'S TOP INVESTING READS ON THE WEB:
The Canadian Couch Potato blog takes a look here and here at some interesting findings from a recent research paper on index fund portfolios. Among them: index funds, when combined together in a portfolio, have a higher probability of outperforming actively managed funds than they do individually.
CFTC Commissioner Bart Chilton on the games being played in the futures markets by the big banks and other mega players.
Facebook stock is looking overheated.
Ashton Kutcher is very good at portraying Steve Jobs in the upcoming movie.
The one question you must ask before you actively invest.
Wharton professor Jeremy Siegel has long been bullish on the market, and over the past few years, he's been dead-on. His enthusiasm for equities is not subsiding.
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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