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U.S. futures indicated a sharply lower start Tuesday with the global sell off in tech shares likely to continue in North American once the opening bell sounds. Ahead of the start of trading, Nasdaq futures were down more than 1 per cent, mirroring the weak showing for tech stocks in Europe and Asia overnight. Dow futures were down by triple digits. On Bay Street, futures were also lower with oil prices sliding alongside the broader markets.

“A sea of red across equity markets suggest we’re heading for another turbulent session as investors come to terms with another sell off on Monday and an increasingly wobbly tech sector,” OANDA analyst Craig Erlam said.

"With FAANG stocks now all in bear market territory and not yet coming to the rescue of the rest of the market, investors have been left wondering if this is going to get messy or whether Black Friday has come a little early in stock markets."

Mr. Erlam said there appears to be a lot of underlying anxiety in the markets “which may prolong the current sell off a little longer, with trade wars, U.S. interest rates, Brexit and the Italian budget standoff all being significant headwinds.”

The latest round of selling in tech stocks came after reports that Apple Inc. had cut production orders for its latest iPhones, reflecting lower demand for the newer models and the decision to offer more phones. Apple shares were down more than 1 per cent in the premarket after falling nearly 4 per cent on Monday.

The European tech sector fell 2 per cent to the lowest level since early last year. In Asia, tech shares were also under pressure overnight, with Samsung Electronics falling 2 per cent in Seoul and Japan’s Tokyo Electron falling 1.8 per cent in Tokyo. Sony Corp. fell more than 3 per cent.

On the corporate front, investors get results Tuesday from U.S. retailers Lowe’s, Best Buy and Target.

Target shares were down about 7 per cent in premarket trading after the company’s third-quarter earnings fell short of analysts' forecasts. The retailer reported adjusted earnings per share in the quarter of US$1.09. The Street had been looking for a figure closer to US$1.12. Revenue came in at US$17.82-billion, just ahead of Wall Street forecasts.

On Bay Street, results are due from Loblaw-parent George Weston Ltd. before the start of trading.

Overseas, markets in Europe were weaker in morning trading with the pan-European STOXX 600 down about 0.7 per cent. Tech, auto and bank stocks were all lower in early going. Shares of Renault were down 2.6 per cent after France moved to oust Carlos Ghosn from the helm of that auto maker a day after his arrest in Japan on financial misconduct allegations.

Britain’s FTSE was down 0.5 per cent just before 6 a.m. ET, France’s CAC 40 lost 0.69 per cent and Germany’s DAX fell 0.78 per cent.

In Asia, markets were also lower with autos and tech shares suffering. Japan’s Nikkei ended down 1.09 per cent. Shares of Nissan fell 5.45 per cent. Hong Kong’s Hang Seng dropped 2.02 per cent and the Shanghai Composite Index was down 2.13 per cent.


Crude prices were weaker after four days of gains with supply concerns and broad market weakness weighing. Both Brent and West Texas Intermediate were lower. The day range on Brent so far is US$65.84 to US$66.90. The range on WTI is US$56.51 to US$57.44.

Concerns about rising global crude supplies have been weighing on the markets with Brent prices about a quarter lower than their October highs. U.S. crude production has risen about 25 per cent so far this year to a record 11.7 million barrels a day.

“Oil prices are on the decline again on Tuesday following a brief bounce that failed to generate any real upside momentum,” Mr. Erlam said. “The prospect of a production cut at the next OPEC+ meeting in a couple of weeks following a recommendation from the JMMC [Joint OPEC-non-OPEC Ministerial Monitoring Committee] hasn’t managed to reverse the trend as of yet, with traders potentially weighing up recent comments from participants against the inventory and output data and deciding the bullish case isn’t strong enough.”

He said Brent and WTI are continuing to find support around US$65 and US$55 respectively “although I wouldn’t write off the possibility of another drop in both to around US$60 and US$50 ahead of the meeting.”

“Despite the sometimes mixed messages we’ve had of late, I think members will want to avoid a repeat of the moves in recent years and will step up to stabilize output with another cut. Whether that will be enough to have the desired effect will depend on the size of it.”

The next OPEC meeting is set for Dec. 6.

In other commodities, gold prices were steady in light trading as market attention begins to shift to a shortened trading week for U.S. Thanksgiving. Spot gold was little changed at US$1,224.45 in early morning trading in Europe. U.S. gold futures were flat at US$1,224.8 per ounce. Gold prices got some support for a slightly softer U.S. dollar. The U.S. dollar index was trading close to the one-week low seen in the previous session.

Silver prices were also down, trading off 0.2 per cent at US$14.40 an ounce.

Currencies and bonds

The Canadian dollar was trading just below 76 US cents early Tuesday with traders looking ahead to midday remarks by Bank of Canada senior deputy governor Carolyn Wilkins. For the day so far, the loonie is trading in a fairly narrow band of 75.83 US cents to 76.01 US cents.

Ms. Wilkins speaks early this afternoon in Montreal on “major public policy frameworks and how those issues have become more complex in the post-global financial crisis world.”

RBC chief currency analyst Adam Cole notes that Ms. Wilkins “has been one of the more interesting BoC speakers in the past.”

“We go into the speech with minimal risk priced for a December hike, but a January hike largely discounted,” Mr. Cole said in an early note.

On world currency markets, the U.S. dollar index edged higher to 96.290, off its weakest levels in more than a week. The index, which weighs the greenback against a basket of its world counterparts, fell about half a per cent last week with Federal Reserve officials flagging concerns about global economic growth.

Overnight, New York Fed President John Williams said: “We will be likely raising interest rates somewhat, but it is really in the context of a very strong economy,” according to Reuters.

Meanwhile, the euro pulled back from a two-week high against the U.S. dollar, reflecting broad market weakness and concern about Italian banks as Italy and the European Union face off over Italy’s budget plans. The euro fell 0.2 per cent to US$1.1429 after earlier reaching a two-week high of US$1.1472.

In bonds, the yield on the U.S. 10-year note was lower at 3.048 per cent. The yield on the 30-year note was also lower at 3.306 per cent.

Stocks set to see action

George Weston Ltd. raised its quarterly dividend as it said it saw strong results at its Loblaw operations, but that its Weston Foods bakery business continued to fall short of its expectations. The company says it will raise its quarterly dividend by 2.5 cents to 51.5 cents per common share. The dividend increase came as George Weston reported a third-quarter profit attributable to common shareholders of $51 million or 40 cents per share on sales of $14.86 billion.

Best Buy Co Inc sold more mobile phones, home theater systems and gaming consoles in the third quarter. Best Buy said U.S. comparable sales rose 4.3 per cent in the three months ended Nov. 3. Analysts on average had expected a 3.7 per cent rise, according to IBES data from Refinitiv. Its total revenue climbed to US$9.59-billion from US$9.32-billion. Best Buy shares, however, fell ahead of the open on a tepid outlook for the holiday quarter. Best Buy said it expects adjusted earnings of between US$2.48 and US$2.58 per share for the fourth quarter. Analysts were expecting earnings of $2.58 per share.

Lowe’s Companies Inc. said it was shedding some of its non-core businesses including its Mexican operations as part of restructuring, while also posting a smaller-than-expected rise in quarterly same-store sales. The company said it intended to exit its retail operations in Mexico and had identified other underperforming or non-core businesses and stores for divestiture. Sales at stores open for more than a year rose 1.5 per cent in the third quarter, below expectations of a 2.93 per cent increase, according to IBES data from Refinitiv.

British low-cost airline easyJet said Brexit was not affecting bookings for next summer, while the company’s CEO said he was confident that the carrier was well-prepared for either a deal or a no-deal scenario. The carrier, the no. 2 low-cost airline in Europe behind Ryanair , struck an upbeat tone, shrugging off worries that fewer consumers from its main market Britain would take holidays when the U.K. leaves the European Union in March next year. “There doesn’t seem to be any concern for people to book their holidays and go away for next summer,” easyJet CEO Johan Lundgren told the BBC on Tuesday.

U.S. medical device maker Boston Scientific Corp has agreed to buy Britain’s BTG Plc for US$4.24-billion in cash, adding technology to fight cancer and other serious diseases to its portfolio. Boston Scientific - best known for making stents to prop open clogged heart arteries - has agreed to pay 840 pence per share, representing a premium of 36.6 per cent to BTG’s previous closing price, the companies said on Tuesday.

Campbell Soup Co shares were up in premarket trading after the company reported a smaller-than-expected decline in quarterly earnings. Net earnings attributable to the company fell to US$194-million, or 64 US cents per share, in the first quarter ended Oct. 28, from US$275-million, or 91 US cents per share, a year earlier. Excluding items, Campbell earned 79 US cents a share, beating analysts’ average estimate of 70 US cents, according to Refinitiv data.

U.S. department store operator Kohl’s Corp raised its full-year profit forecast and posted better-than-expected quarterly same-store sales, as it moved trendier fashion to stores quicker and bolstered its online business. The company now expects full-year earnings forecast of US$5.16 - US$5.36 per share, compared with from its prior forecast of US$4.96 - US$5.36.

More reading:

Tuesday’s small-cap stocks to watch

Economic news

The U.S. Commerce Department said housing starts rose to a seasonally adjusted annual rate of 1.23 million, up from 1.21 million a month earlier.

With Reuters and The Canadian Press

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