The Toronto stock market was in for a negative start to the session Wednesday amid growing pessimism over the pace of budget negotiations aimed at heading off a fiscal crisis in the U.S.
The Canadian dollar was off a slight 0.02 of a cent to 100.51 cents US.
U.S. futures were also lower with the Dow Jones industrial futures down 26 points to 12,836, the Nasdaq futures shed 5.8 points to 2,635.5 while the S&P 500 futures dropped 3.9 points to 1,393.5.
North American markets were set to extend the losses from Tuesday, triggered by comments from Senate Majority Leader Harry Reid that there has been little progress in talks about avoiding a so-called fiscal cliff at the end of next month.
Economists say the combination of steep tax increases and spending cuts would significantly cut economic growth and likely push the U.S. back into recession and damage other economies around the world.
President Barack Obama is meeting with corporate executives at the White House on Wednesday, and then is travelling to Pennsylvania on Friday to push for upper income bracket earners to pay higher tax rates.
But he is not meeting with Congressional leaders until next week.
“More members from both sides need to start walking toward the middle in the next four weeks and, at least, agree on a two-step process to avoid the cliff,” says BMO Capital Markets senior economist Sal Guatieri.
“This involves a down-payment on some deficit reduction by year end, while leaving the details on broader deficit fighting when the new Congress begins next year.”
Research In Motion Ltd. shares will likely be under further selling pressure after it lost a contract dispute over the use of Nokia patents. A Swedish arbitrator has ruled that RIM has breached a contract between the companies and “is not entitled to manufacture or sell wireless local access network (WLAN) products without first agreeing royalties with Nokia.”
RIM stock was down 2.5% in pre-market trading in New York.
Its stock fell 10% Tuesday after soaring more than 25% over the previous six sessions on a variety of analyst upgrades and optimism about the launch of its new BlackBerry 10 operating system in January.
The drop came following a report saying BlackBerry market share in the U.S. has fallen to 1.6% in the 12-week period ending Oct. 28, compared to 8.5% in the three-months ended last October.
Elsewhere in the tech sector, CGI Group Inc. swung to a loss in its fiscal fourth quarter even as the information technology and business process services firm rounded out a quarter and a year that saw increases in revenue.
The Montreal-based concern says its a net loss of just under $170 million or 58 cents per diluted share in the latest quarter, compared with a profit of $69.6 million or 26 cents per share in the year-earlier period.
Revenue rose to $1.61 billion from just over $1 billion in the fiscal 2011 quarter. Ex-items, the company says it would have had net earnings of $100 million or 37 cents per share, down from 39 cents per share a year earlier.
Commodity prices fell as the U.S. dollar strengthened. January crude on the New York Mercantile Exchange dropped 82 cents to US$86.36 a barrel.
December copper lost two cents to US$3.52 while December gold faded $7.20 to US$1,735.10 an ounce.
Meanwhile, investors looked ahead to the release of data on new home sales for October during the morning.
Guatieri added that sales are expected to fall about two% to an annualized rate of 382,000, “solely because of Hurricane Sandy.”
That would follow a 5.7% increase to two-and-a-half-year highs in September.
And during the afternoon, the Federal Reserve releases its Beige Book, the central bank’s latest regional economic survey.
Earlier in Asia, South Korea’s Kospi shed 0.7%, Australia’s S&P/ASX 200 lost 0.2% and Hong Kong’s Hang Seng fell 0.6%.
Mainland China’s Shanghai Composite Index fell 0.9% to a four-year low while the smaller Shenzhen Composite Index tumbled 1.9%.
European bourses were lower as London’s FTSE 100 index shed 0.27%, Frankfurt’s DAX was off 0.33% while the Paris CAC 40 lost 0.45%.