North American stock markets are likely to search for direction Monday as investors consider whether recent declines are overdone amid concern that a global recession was in the making.
Weighing on sentiment is a steep decline in Asia where Japan’s Nikkei 224 index dropped 1.7% to close at 8,295.63, its lowest finish since Nov. 28, and Hong Kong’s Hang Seng tumbled two% to 18,185.59.
But the Dow Jones industrial futures, which indicate where North America’s largest market is likely headed, rose three points to 12,106, the Nasdaq futures were up 7.75 points to 2,462.75 and the S&P 500 future gained 3.7 points to 1,277.60.
The Canadian dollar rose 0.05 of a cent to 95.87 cents US after finishing last week at a 5-1/2 month low of 96.21 cents US, losing more than five cents in a little over a month as nervous traders avoided risk and flocked to the U.S. Treasury and reduced expectations for a rate hike.
Crude prices held below the US$83 a barrel level with the July contract on the New York Mercantile Exchange off 92 cents to US$82.31 a barrel.
The July copper contract on the Nymex fell two cents to US$3.29 a pound. Copper is widely viewed as a key economic barometer as it is used in so many industries and China has been the biggest purchaser of the metal.
Bullion prices for August were lower with the contract falling $3.10 to US$1,619 an ounce.
Over the weekend, an agreement involving BCE Inc. and its financial backers will see Bell Canada add a minority ownership stake in 11 data centres in Alberta, British Columbia and Ontario to its holdings. The companies say the deal is valued at $1.1-billion, including assumed debt.
On Tuesday, the Bank of Canada is widely expected to leave its key rate unchanged at 1. But Bank of Canada governor Mark Carney could also end up discouraging any thought of a rise in interest rates this year because of slowing economic condition, as well as worries about the future of the Eurozone and the health of banks in the region.
Unemployment in the 17 countries that use the Euro currency stayed at a record-high 11% in April. And there were signs that growth in China, which helped sustain the global economy through the recession, is slowing significantly. China’s manufacturing weakened in May, according to surveys released Friday.
Germany’s DAX lost 0.9% to 5,993 and Switzerland’s SMI shed 0.6% to 5,741, though France’s CAC-40 managed to rise 0.5% to 2,968.49. Markets in Britain were closed for a public holiday.
In Spain, investors are waiting for what the government intends to do to boost the finances of some of its ailing banks. The worry is that the government is already strapped for cash and might be overwhelmed by the costs of rescuing its own banks. It might have to tap EU rescue funds, but it is reluctant to do so because such aid would come with conditions on the government’s policies.
As worries about Spain’s public finances have grown, investors have shied away from lending it money, asking for higher interest rates. Those rates remained high on Monday, at 6.44% for 10-year notes, perilously close to the 7% that has already pushed Greece, Ireland and Portugal to seek financial aid.
