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Trade worries, emerging-market turmoil rattle global equities


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Trade worries, emerging-market turmoil rattle global equities

? Trade concerns loom over stock markets.

? Emerging-market currencies' sell-off intensifies.

? Bank of Canada to release rate decision.

? Wall Street set to open lower.

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Futures point to a lower opening for Wall Street as trade concerns weighed on global stock markets, with Canadian officials set to resume negotiations with the U.S. over a new North American trade agreement.

Canadian Prime Minister Justin Trudeau said the country would not compromise on its key demands in the talks with the U.S. to hammer out a successor to the North American Free Trade Agreement and reiterated that "no NAFTA is better than a bad NAFTA deal for Canadians."

"The main preoccupation for investors continues to be on whether the U.S. is serious about arriving at some form of deal with Canada over NAFTA in the wake of President [Donald] Trump's tweets at the weekend, that it wasn't and isn't a political necessity to get a deal," wrote Michael Hewson, chief market analyst at CMC Markets UK. Trump warned in a tweet over the weekend that there was "no political necessity" to keep Canada in the new NAFTA with Mexico and threatened the removal of Canada from the revamped trade deal if it fails to reach "a fair deal for the U.S."

The Euro Stoxx 50 shed 0.70% as of 6:39 a.m. ET and the FTSE 100 dropped 0.45%. Germany's DAX was down 0.59%, with Bayer AG's shares losing 2.44% as the it lowered its 2018 profit forecast to reflect its acquisition of agricultural company Monsanto Co.

Earlier in Asia, the Shanghai SE Composite fell 1.68% and Hong Kong's Hang Seng slid 2.61% against the backdrop of public comments on the U.S.'s proposed 25% tariff on $200 billion of Chinese goods shortly coming to an end.

"The next round of import tariffs, if implemented, will chip away at growth and in turn, trigger a policy response [from China]," Morgan Stanley analysts wrote in a note, predicting that the potential new round of tariffs will knock 14 basis points off global GDP growth.

Sterling depreciated 0.23%, the Japanese yen ticked down 0.11% and the euro was broadly flat against the dollar. Emerging-market currencies continued to sell off, with the South African rand falling 1.00% as data showed local private-sector activity contracting in August, the largest drop since March 2016.

The Argentine government, meanwhile, is hoping to reach a better deal with the International Monetary Fund for financial support of the crisis-hit economy in the second half of September, as the peso was at 38.954 against the dollar yesterday. The Indonesian rupiah dipped 0.09%, the Indian rupee fell 0.46% and the Mexican peso shed 0.80%.

The Canadian dollar was largely flat as investors expect the Bank of Canada to keep its monetary policy unchanged later today. However, the central bank "will probably signal that an interest rate rise is on the cards at the next meeting in October," Stephen Brown of Capital Economics said in a note.

Italian government bonds climbed as 10-year yields shed more than 10 basis points to drop below 3% amid reports that the League party may seek to limit spending in the upcoming budget in a bid to keep debt under control. Ten-year U.S. Treasury yields stood at 2.898%.

Brent crude oil lost 1.13% to $77.29 per barrel on the ICE Futures Exchange. Gold edged 0.29% higher to $1,194.92 per ounce.

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The day ahead:

8:30 a.m. ET — U.S. international trade (Econoday consensus: $50.2 billion deficit)

8:30 a.m. ET — Canada merchandise trade (Econoday consensus: C$1.2 billion deficit)

8:55 a.m. ET — U.S. redbook

9:20 a.m. ET — U.S. Fed's James Bullard speaks

10 a.m. ET — Bank of Canada interest rate announcement (Econoday consensus: no change)

12:30 p.m. ET — U.S. Fed's John Williams speaks

3 p.m. ET — U.S. Fed's John Williams speaks

4 p.m. ET — U.S. Fed's Neel Kashkari speaks

5:30 p.m. ET — U.S. Fed's John Williams speaks

6:30 p.m. ET — U.S. Fed's Raphael Bostic speaks