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Canadian investors should brace themselves for a rough start to a shortened week, following the three-day Victoria Day weekend. Global stocks were set for a drubbing on Tuesday morning, and Canadian indexes will have to catch up to Monday's decline as well.



U.S. stock index futures were down sharply with a little more than an hour before markets opened, suggesting that stocks would fall at the start of trading. Futures for the Dow Jones industrial average were down 210 points or 2.1 per cent. Futures for the broader S&P 500 were down 25 points or 2.4 per cent. Both indexes fell towards the end of trading on Monday, with the Dow closing 1.2 per cent lower.



In Europe, the U.K.'s FTSE 100 was down 2.5 per cent and Germany's DAX index was down 2.7 per cent in afternoon trading. In Asia, Japan's Nikkei 225 fell 3.1 per cent in overnight trading.

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U.S. Treasury bonds were again being sought for their safe haven status, as the euro fell against the U.S. dollar. Those currency shifts were also affecting commodity prices, with crude oil falling below $68 (U.S.) a barrel, down $2.46. This decline will likely have a big impact on the commodity-heavy S&P/TSX composite index.



Although political tension between South Korea and North Korea is weighing on Asian markets, Europe continues to be the biggest source of investor anxiety. There, the rate at which banks lend to one another has risen to its highest level since last July, reflecting concern over the health of financial firms.



At the same time, some European countries are now making substantial budget cuts in an effort to bring their deficits down -- a necessary move, but one that raises concerns about economic growth in the region as it emerges from recession (in part because of big government spending).





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