Worries over the winding down of the Federal Reserve's massive bond-buying purchases continue to inflict damage on global equity markets, with many Asian indexes getting slammed overnight - including emerging markets again.
But U.S. and Canadian stock futures suggest traders may shrug off the ugly activity overnight and keep Wall Street and Bay Street largely treading water for now.
Hong Kong and Japanese stock indexes were both down more than 2 per cent, and Indonesia's JSX index was off a further 3.2 per cent, which was on top of a 5.6 per cent plunge on Monday. India's S&P BSE Sensex index was down 0.3 per cent as the rupee - the Indian currency - fell to another record low against the greenback. Several other regional currencies were also weaker, amid signals that investors were withdrawing funds out of emerging markets.
Traders overseas are nervous about being long the market ahead of the minutes that will be released Wednesday from the most recent Federal Open Market Committee meeting. It could provide further indications that the Fed may begin tapering its quantitative easing measures next month. The majority of economists believe the Fed will soon start the unwinding of stimulus measures given recent improvement in the U.S. labour market, but the degree to which it will scale back bond purchases is still uncertain.
Both the Dow Jones industrial average and the S&P 500 have fallen for four days in a row - the longest losing streak this year. The TSX Monday suffered a 148-point decline. Rising bond yields are creating concerns of slowing growth for stocks given the higher borrowing costs. The U.S. 10-year Treasury bond hit a two-year high of 2.90 per cent Monday, but today there is some relief, with the yield trading this morning at about 2.82 per cent. Canadian bonds track very closely to U.S. issues.
Elsewhere, the Canadian dollar took a tumble this morning as wholesale trade figures for June came in much weaker than expected, and is down about half a cent from Monday's close.
Now, here's a closer look at what's going on this morning and what's to come.
Futures: S&P 500 +0.20 per cent; Dow +0.13 per cent; Nasdaq +0.24 per cent; S&P Toronto -0.08 per cent
Hong Kong's Hang Seng -2.20 per cent
Shanghai composite index -0.60 per cent
Japan's Nikkei -2.63 per cent
London’s FTSE 100 -0.44 per cent
Germany’s DAX -0.84 per cent
France's CAC 40 -1.17 per cent
WTI crude oil (Nymex Oct) -0.50 per cent at $106.33 (U.S.) a barrel
Gold (Comex Dec) -0.02 per cent at $1,365.40 (U.S.) an ounce
Copper (Comex Dec) -0.28 per cent at $3.33 (U.S.) a pound
Canadian dollar at 96.16 (U.S.), versus 96.69 at Monday's North American close.
U.S. dollar index down 0.20 at 81.01
U.S. 10-year Treasury yield 2.82 per cent, down 0.07
ECONOMIC INDICATORS TO WATCH:
Canada's wholesale trade plunged 2.8 per cent in June, the biggest month-over-month decline in more than four years. Market forecasts were for a drop of 0.5 per cent.
STOCKS TO WATCH:
Home Depot reported earnings of $1.24 per share, beating forecasts, and lifted its guidance. Shares were up 3 per cent in the premarket.
Best Buy reported second-quarter earnings per share of 32 cents, 20 cents better than Street estimates, and revenue of $9.3-billion also beat the Street view. Shares are up 10 per cent in the premarket.
J.C. Penney Co. said it swung to a wider loss in the second quarter as sales dropped 12 per cent. But it predicted it would end 2013 with more than $1.5-billion in liquidity and said back to school sales have been encouraging. Shares are up 2.5 per cent in the premarket.
Barnes & Noble Inc. Chairman Leonard Riggio, the bookstore retailer’s largest shareholder, suspended his plans to buy the company’s retail business. The company also reported weaker-than-expected quarterly earnings. Shares tumbled 13 per cent in the premarket.
Other earnings today include: Summit Industrial; La-Z-Boy Inc.; TJX Companies and Intuit Inc.
THIS MORNING'S TOP INVESTING READS ON THE WEB:
By some measures, Google shares are much cheaper than they were at the IPO nine years ago.
Why the stock market in September is likely to disappoint.
Investing in luxury items can yield high returns, but the risks are commensurate.
Apple's iTunes Radio is a dangerous monkey wrench that could unravel plans by Pandora and Spotify for long-term growth and profitability.
A scary development: China's housing prices continue to rise.
Twitter is an important tool in the trading toolbox. Just don't place too much weight on social media.
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.