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Global markets fell as investors grew uneasy over mounting tensions between the U.S. and China ahead of talks between the two countries aimed at striking a durable trade deal.
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Wall Street futures pointed lower after U.S. markets ended sharply higher yesterday.
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Dow futures were down 0.45 per cent, S&P 500 futures dropped 0.74 per cent and Nasdaq futures were 0.97 per cent lower as of 5:50 a.m. ET.
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TSX futures were in positive territory after Canada’s main stock market was closed for holiday yesterday.
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On Wall Street, markets are watching earnings from JPMorgan Chase & Co., Goldman Sachs Group Inc., Citigroup Inc., Johnson & Johnson, BlackRock Inc. and Wells Fargo & Co.
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“If one looks at the recent history of export controls and charges for ships docking in ports, then it’s been largely interpreted as a path towards negotiation rather than a fresh outbreak of hostilities on the trade front between the U.S. and China,” Investec chief economist Philip Shaw said.
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“So yes, there is uncertainty, but you’ve had a huge rally, not just in U.S. stocks, but a lot of global indices as well. And while there are still some question marks over U.S.-China trade friction, I’d interpret the latest sell-off as a bit of a correction rather than a huge stepping-up of investor uncertainty,” he said.
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Overseas, the pan-European STOXX 600 was down 0.62 per cent in morning trading. Britain’s FTSE 100 slipped 0.33 per cent, Germany’s DAX declined 1.01 per cent and France’s CAC 40 gave back 0.86 per cent.
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In Asia, Japan’s Nikkei closed 2.58 per cent lower, while Hong Kong’s Hang Seng fell 1.73 per cent.
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Oil prices reversed early gains and fell amid uncertainty about trade tensions between the U.S. and China and as the International Energy Agency flagged weaker fundamentals.
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Brent crude futures slid 1.6 per cent to US$62.31 a barrel. West Texas Intermediate (WTI) crude dropped 1.6 per cent to US$58.54. Both contracts were near a five-month low.
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Markets “are still assessing ... the potential consequences of the Middle East peace process, the ongoing attacks on Ukrainian and Russian oil installations, and the possibility of reigniting the trade war between the world’s two economic behemoths,” PVM Oil analyst Tamas Varga said.
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In other commodities, spot gold rose 0.6 per cent to US$4,132.89 an ounce after hitting a record high of US$4,179.48 earlier in the session. U.S. gold futures for December delivery gained 0.4 per cent to US$4,149.20.
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The Canadian dollar weakened against its U.S. counterpart.
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The day range on the loonie was 71.05 US cents to 71.28 US cents in early trading. The Canadian dollar was down about 2.37 per cent against the greenback over the past month.
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The U.S. dollar index, which weighs the greenback against a group of currencies, climbed 0.12 per cent to 99.39.
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The euro declined 0.08 per cent to US$1.1561. The British pound dropped 0.5 per cent to US$1.3266.
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In bonds, the yield on the U.S. 10-year note was last down at 4.003 per cent.
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BCE Inc.’s Bell Canada is expanding its internet offerings into Western Canada for the first time, using the government’s mandated fibre-sharing framework to offer service bundles to millions of new potential customers over rival Telus Corp.’s network.
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6 am ET: U.S. NFIB small business economic trends survey, which showed a decline in September amid expectations of unfavorable operating conditions in the next six months, and many owners reported raising prices or planning to, suggesting that inflation was poised to increase further.
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8:30 am ET: Canada building permits for August.
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11:15 am ET: Bank of Canada senior deputy governor Carolyn Rogers speaks in Vancouver
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With Reuters and The Canadian Press
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