The words of U.S. Senate majority leader Harry Reid are continuing to haunt stock markets this morning, with major overseas indexes lower and U.S. stock futures pointing down.
Mr. Reid made some worrisome comments Tuesday afternoon that talks on averting the U.S. fiscal cliff of tax increases and spending cuts have made little progress. U.S. and Canadian markets extended losses on the news Tuesday, and that selling momentum is continuing into today.
U.S. stock futures are only mildly lower this morning, so a serious selloff isn't expected. Many think the negative stock market reaction was overdone. Republicans and Democrats got together this week for the first serious post-election talks on the fiscal cliff, so some negative comments really aren't that surprising given the political posturing that comes along with such negotiations.
The knee-jerk reaction to the comments also suggest that the market may rally when news comes out of Washington that the negotiations are making some progress. Today, U.S. President Barack Obama will be meeting with business leaders for discussions on the budget.
Gold prices are selling off as the opening approaches, with New York futures posting losses of greater than 1 per cent, as the U.S. dollar regained some strength.
Markets may take some direction from U.S. new home sales data and the release of the Federal Reserve's Beige Book later today, which should show a modest pace of economic growth in the U.S. amid a still struggling labour market.
Now, here's what else you need to know before markets open this morning.
MARKETS:
Equities:
U.S. futures: DJIA -0.3 per cent; S&P 500 -0.5 per cent; Nasdaq -0.4 per cent
Hong Kong's Hang Seng index -0.62 per cent
Shanghai composite index -0.86 per cent
Japan's Nikkei -1.22 per cent
London's FTSE 100 -0.31 per cent
Germany's DAX -0.13 per cent
France's CAC 40 -0.26 per cent
Commodities:
WTI (Nymex Jan) -0.58 per cent at $86.67 (U.S.) a barrel
Gold (Comex Feb) -1.61 per cent at $1,714.40 (U.S.) an ounce
Copper (Comex Mar) -0.48 per cent at $3.53 (U.S.) a pound
Currencies:
Canadian dollar down 0.0001, or 0.01 per cent, at 1.0055 (U.S.)
STOCKS AND ECONOMIC INDICATORS TO WATCH:
(1000 am. ET) The U.S. Commerce Department reports on new home sales in October. Economists expect 386,000 annualized sales.
(200 p.m. ET) The U.S. Federal Reserve Board issues its Beige Book, a survey of economic conditions around the country.
Research In Motion Ltd. has lost a contract dispute over the use of Nokia patents in a case which could halt sales of its BlackBerry phones if it does not reach a deal to pay royalties to the Finnish company. RIM shares are down 2.3 per cent in the premarket after falling 10 per cent in regular trading on Tuesday.
Costco says it will pay shareholders a special dividend of $7 per share next month in addition to the wholesale club operator's regular quarterly dividend. Shares are up 5 per cent in the premarket.
CNOOC Ltd. is facing new delays in its effort to close its proposed $15.1-billion acquisition of Calgary-based Nexen Inc., after a deadline for U.S. approval of the transfer of Nexen's Gulf of Mexico assets expired without a decision.
CGI Group Inc. swung to a loss in its fiscal fourth quarter even as the information technology and business process services firm rounded out a quarter and a year that saw increases in revenue.
Trading firm Getco Holding Co. offered to take control of Knight Capital Group Inc. in a deal that it said valued the electronic trading firm at $3.50 a share. Knight's shares are up 18 per cent in the premarket.
Green Mountain Coffee Roasters Inc. is up 23 per cent in the premarket after the company reported better-than-expected fourth-quarter profit late Tuesday.
Other earnings today include Reitmans Canada Ltd.
THIS MORNING'S TOP INVESTING READS ON THE WEB:
Why the odds are so great against RIM and Nokia.
Money managers at Pimco, the world's biggest bond fund, are now warning stock investors that there will be no meaningful recovery until 2022.
Why the Shanghai stock market is sliding despite the rebounding Chinese economy.
Cyclical stocks are entering their growth season. These U.S. ETFs let you play the seasonal trend.
GMO, the Boston-based asset manager, says it has "given up" on the bond market, deciding to ditch long-dated sovereign debt as investors continue to pour billions into government bonds, including US Treasuries.
Some investors expect stock buybacks to increase and a handful of ETFs are ready to capitalize on this strategy. But it may not prove as profitable as investors expect.
Moody's Investor's Service expects smooth sailing for U.S. industrial REITs in 2013.
Don't expect a sustained rally in shares of Bombardier.
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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