Equity investors had plates of negative news before them as they started the week, ranging from imminent spending cuts in the United States, slowing growth in Asia, a warning about France's credit rating and the prospects of another rift in Europe.
The S&P TSX Composite Index was poised to open lower Monday as investor take in growing doubts that the United States can reach agreement on a solution to its debt, adding to concerns about European debt.
The Canadian dollar lost ground, trading at 96.56 U.S. cents. It was trading at 99 U.S. cents just a week ago.
The Toronto market tumbled 384 points or 3.13% last week as investors become more wary of making bets because of the uncertainty surrounding the debt crisis and frustration over Euro-zone leaders apparent lack of recognition that time is running out and the available options for dealing with it dwindle.
In Canadian corporate news, Valeant Pharmaceuticals International, Inc. says it has signed an agreement to acquire iNova, a private Australian pharmaceutical group in a deal that could be worth as much as $714 million.
Aecon Group Inc. said it has a preliminary agreement worth $250 million to do interior work on a new process mill at the Potash Corp mine site in Saskatchewan.
Stateside, Dow stock futures lost 168 points, or 1.4%, trading at 11,599 before the New York Stock Exchange opened. S&P 500 futures fell 20.20 points, or 1.7%, to 1,193.70.
A special deficit-reduction super-committee in Washington was expected to admit failure in its quest to agree on how to improve government finances by $1.2 trillion U.S. over the coming decade.
That would trigger about $1 trillion U.S. over nine years in automatic across-the-board spending cuts that some investors fear might not be tuned well enough to sustain growth and create jobs.
Britain's FTSE 100 fell 2.1% late Monday morning, France's CAC 40 lost 2.9% and Germany's DAX lost 2.8%.
In Europe, ratings agency Moody’s said a recent rise in interest rates on French government debt and weaker economic growth prospects could be negative for France’s AAA credit rating.
Moreover, a resounding election victory by Spain’s centre-right People’s Party over the weekend failed to calm nervous debt markets. The difference between Spanish and German bond yields rose to 472 basis points in early trade, up by around 28 bps from settlement on Friday.
Japan's Nikkei dipped 0.3% and Hong Kong's Hang Seng fell 1.4%.
In Asia, Singapore and Thailand said their economies would shrink in the fourth quarter, and Japan posted a bigger-than-expected drop in October exports. Chinese Vice-Premier Wang Qishan warned that the global economy is in a grim state.
Gold fell by more than 1% to $1,709.10 U.S., off an intraday low of $1,701.09. It fell 3.5% last week, its largest one-week decline in a month.
Crude oil fell $1.57 to $96.10 U.S. a barrel.
Copper slid 2.8% to $3.31 U.S. a pound.
