The Toronto stock market was in for a sharply lower open Monday, led by sliding resource stocks as traders worry about the debt standoff in Washington that threatens to bring the U.S. to the brink of default.
The Canadian dollar was lower amid falling prices for oil and metals, down 0.23 of a cent to 96.93 cents US.
U.S. futures were sharply lower as the U.S. government entered a second week of a partial shutdown as Democrats continued to resist calls from Republicans to link funding to changes in the country's three-year-old health-care law and spending cuts.
Now, it's becoming clear that the Republicans intend to extend that linkage to raising the government's debt limit, which will be reached on Oct. 17.
The Dow Jones industrial futures fell 123 points to 14,875, the Nasdaq futures were down 24.75 points to 3,209.75 while the S&P 500 futures dropped 14.75 points to 1,670.
"Markets are getting more and more on edge after comments over the weekend from House Speaker (John) Boehner," observed BMO Capital Markets senior economist Robert Kavcic.
Growth forecasts revised down
Democrats insist that Republicans could easily reopen the government if Boehner simply allowed a vote on the emergency spending bill.
But Boehner calls that a non-starter, saying in a Sunday television interview that "the votes are not in the House to pass a clean debt limit, and the president is risking default by not having a conversation with us."
Meanwhile, traders also worry about the economic damage caused by the government shutdown.
BMO's Kavcic notes that his firm "revised down our Q4 U.S. growth call to 2.5 per cent from three as a result of an assumed three-week partial government shutdown."
BMO has also cut growth through the first three quarters of 2014 by about a tenth of a percentage point each, "reflecting the negative impact we'll probably see on consumer and business confidence from this political stalemate."
Worries about the economic fallout of the shutdown and reaching the debt ceiling pushed crude oil below $103 US a barrel. The November contract on the New York Mercantile Exchange fell 91 cents to $102.93 a barrel.
December copper dipped three cents to $3.27 a pound while investors looking for safety pushed December bullion ahead $7.80 to $1,317.70 an ounce.
BlackBerry rumours city Google, Cisco as potential buyers
Investors also looked ahead to the start of the third-quarter earnings season in the U.S. this week. Dow components JPMorgan Chase and Wells Fargo report on Friday.
Elsewhere on the corporate front, shares in BlackBerry were up four per cent in pre-market trading in New York. Reuters reported Friday that the smartphone maker is in talks with Cisco Systems, Google and SAP about selling them all or parts of itself.
The report came almost two weeks after BlackBerry's biggest shareholder, Fairfax Financial Holdings, offered to take the company private in a deal worth about $4.7 billion.
Loblaw says its Real Canadian Superstore and Real Canadian Liquorstore locations in Alberta will remain open despite a strike by its unionized workforce, which walked off the job on Sunday. Loblaw says it continues to negotiate with the UFCW union, which represents 8,500 workers at stores in Edmonton, Calgary, Red Deer, Grande Prairie, Lethbridge, Fort McMurray, Medicine Hat, Lloydminster and Camrose.
European bourses also lost ground as London's FTSE 100 index shed 0.78 per cent, Frankfurt's DAX lost 0.92 per cent while the Paris CAC 40 lost 0.8 per cent.
Earlier in Asia, U.S. debt worries pushed Japan's Nikkei index, the Asian heavyweight, down 1.2 per cent, Hong Kong's Hang Seng index dipped 0.7 per cent while trading was nearly flat on South Korea's Kospi, which fell 0.1 per cent.
Australia's S&P/ASX 200 fell 0.9 per cent while China's markets were closed Monday for a public holiday.
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