The Toronto stock market was set for a negative open Wednesday as worries about Europe’s government debt crisis continued to absorb investors.
Attention was again focused on Italy as economist Mario Monti said he has succeeded in forming a new government and aims to restart economic growth. However, bond markets continued to demand worrisomely high interest rates on the country’s bonds.
The Canadian dollar was lower as nervous investors bought up U.S. Treasuries, falling 0.46 of a cent to 97.5 cents US.
U.S. futures were negative as the Dow Jones industrial futures lost 68 points to 11,970. The Nasdaq futures fell nine points to 2,350.75 and the S&P 500 futures were down 9.3 points to 1,244.8.
The yield on Italy’s benchmark 10-year bond jumped back above the seven per cent mark again Wednesday, a level widely viewed as unsustainable.
It is also a level that in the recent past forced other heavily indebted countries such as Ireland, Portugal and Greece to seek bail outs. However, Italy is the eurozone’s third largest economy and with debts equal to 120% of gross domestic product, it is widely viewed as too big to bail out.
Commodity prices were lower, reflecting worries about lower demand for oil and metals if Europe lands back in recession and stalls the global economic recovery.
The stronger U.S. dollar also pushed prices lower. A stronger greenback usually helps depress commodity prices, which are denominated in dollars, as it makes oil and metals more expensive for holders of other currencies.
The December crude contract was down 28 cents to US$99.09 a barrel.
The December copper contract on the Nymex lost five cents to US$3.44 a pound and the December gold contract gave back $7.90 to US$1,774.30 an ounce.
European markets were mainly lower as London’s FTSE 100 index lost 0.59%, Frankfurt’s DAX fell 0.78% while the Paris CAC 40 gained 0.17%.
The showing in Europe followed losses in Asia, where Japan’s Nikkei 225 index lost 0.9% to close at a six-week closing low. Hong Kong’s Hang Seng dropped two per cent and South Korea’s Kospi shed 1.6%.
Mainland China’s benchmark Shanghai Composite Index lost 2.5% while the smaller Shenzhen Composite Index dropped 2.6%.
Investors also took in earnings news from two of Canada’s biggest grocers.
Loblaw Companies Limited (TSX: L) said its third-quarter profit was up 19.8% from the same time last year, rising to $236 million or 84 cents per share. Revenue at the country’s largest grocery company was also up, growing two per cent to $9.7 billion.
Metro Inc.’s (TSX:MRU.A) fourth-quarter net earnings dropped 7.8% to $86.1 million as it booked closure costs for the operations of a meat processing plant in Montreal and a grocery warehouse in Toronto. Sales grew to $2.66 billion from $2.56 billion.