TSX to move lower

U.S. futures were lower as the Dow Jones industrial futures pulled back 39 points to 14,939, the Nasdaq lost 8.2 points to 2,912 while the S&P 500 futures declined 5.75 points to 1,604.25.

Central bank worries also pushed Toronto and New York markets lower Wednesday as the TSX fell 114 points — its eighth loss in nine sessions — and the Dow fell 127 points.

Worries about central banks have been growing ever since Federal Reserve chief Ben Bernanke said on May 22 that the Fed might pull back on its US$85 billion-a-month bond-buying program, known as quantitative easing, if economic data improves, especially hiring.

The QE program has fuelled a strong rally on U.S. markets.

Now Japanese media reports are saying overseas hedge funds may be dumping the country’s equities following disappointment over the Bank of Japan’s decision earlier in the week to refrain from additional monetary easing measures.

Those reports helped send Tokyo’s Nikkei 225 index plunging 6.4 per cent, while the yen strengthened 1.5 per cent against the greenback. A rising yen spells bad news for Japanese manufacturers because it will make their exports look more expensive overseas.

In April, the Bank of Japan announced a massive stimulus in an attempt to get inflation up to two per cent. The euphoria that drove the Nikkei up to five-year highs followed by wild fluctuations. The index is now around 20 per cent down from its May 23 peak, leaving the market in bear market territory.

Meanwhile, the World Bank lowered its global economic-growth forecast, saying it expects expansion of only 2.2 per cent this year, down from a 2.4 per cent projection issued in January.

In its semiannual Global Economic Prospects report, the World Bank also revised lower its expectations for growth in China, Brazil and India. At the same time, it upped growth estimates for Japan and the U.S.

Commodity prices were lower with July crude on the New York Mercantile Exchange down 51 cents to US$95.37 a barrel.

August bullion on the Nymex fell $7.60 to US$1,384.40 an ounce while July copper lost three cents to US$3.19.

Elsewhere in Asia, the Hang Seng index fell 2.2 per cent while the Kospi in South Korea lost 1.4 per cent.

Mainland Chinese were pummelled as accumulating signs of a slowdown in growth in the world’s number-two economy caused investors to retreat. The Shanghai Composite Index slid 2.8 per cent to its lowest close in six months.

European bourses were in the red with London’s FTSE 100 index down 0.76 per cent, Frankfurt’s DAX fell 1.27 per cent and the Paris CAC 40 dropped 0.44 per cent.

On the corporate front, Empire Company Limited (TSX:EMP-A) and its wholly-owned subsidiary, Sobeys Inc. announced Wednesday after the close that they are buying rival Canada Safeway Limited for $5.8 billion in cash.

BRP Inc. (TSX:DOO), a Quebec-based maker of specialized off-road and highway vehicles, posted net income of $25.7 million, down from $54.6 million a year ago. Normalized net income, which adjusts for the impact of foreign exchange and other items, rose by 7.7 per cent to $53.4 million or 52 cents per share. Revenue climbed 5.5 per cent to $804.3 million.

Travel company Transat A.T. Inc. (TSX:TRZ.B) had a net loss of $22.8 million or 59 cents per share in the quarter ended April 30. On an adjusted after-tax basis, Transat lost $1.43 million or four cents per share, which was far better than the 26 cents per share loss estimated by analysts and an improvement from a loss of 64 cents per share in the second quarter of 2012.