By James Langton

(March 21 – 09:00 ET) – Markets look poised for a down open this morning as profit worries return to dominate trader attitudes. Yesterday’s 50 basis point rate cut in the U.S. just isn’t cutting it with traders.

Morgan Stanley Dean Witter & Co. reported its first quarter profit fell 34% thanks to a drop in investment banking business. Lehman came in down 28%.

However, one possible reason for the Fed’s decision to just move 50 bps came this morning when the U.S. Consumer Price Index was reported up 0.3% in February on both the headline and the core rate. The jump was unexpected at least for the core rate.

Here in Canada the CPI was reported up 0.4% to 2.9% on the headline, but up a large 0.5% on the core rate to 2%. Excluding energy prices alone, the CPI rose by 2.4% in February, the highest 12-month advance since October 1995. These numbers will likely not worry traders too much, although they do raise the spectre of returning inflation.

Also in Canada, retail trade numbers were reported stronger than expected, up 0.6% to $23.8 billion in January. In constant dollars, retail sales rose 1.1% in January. Statistics Canada attributes the gain to several factors including: strong employment; tax cuts in January; falling interest rates and robust housing starts.

In Europe stocks are down sharply today, led by telecoms again. Yesterday’s disappointing U.S. rate cut and a report showing business confidence in Germany at a 20-month low has traders concerned about profits. Ericsson AB, Nokia Oyj and France Telecom SA are leading declines. The FTSE is off 127 points to 5,520. The CAC 40 has dropped 145 points to 4,993. The DAX is down 172 points to 5,609.

Overnight in Asia the reaction was mixed. In Japan, the Nikkei actually gained seven points to 13,104. In Hong Kong, the Hang Seng dropped 69 points though to 13,154.

In business news, Sceptre Investment Counsel Ltd. reported first-quarter earnings were 16¢ a share, compared with 27¢ a share for the same period last year.

TransCanada PipeLines has announced that Harold Kvisle has been appointed president and CEO effective May 1. Kvisle is currently TCPL’s executive vice president responsible for trading and business development.

Mitel has announced the appointment of Patrick Brockett as its new president and CEO. Brockett joins Mitel from National Semiconductor where he was executive vice president of the Analog and Wireless Group.

ATI Technologies Inc. is buying SONICblue’s FGL Graphics division for up to US$10 million. ATI expects the acquisition of FGL Graphics to be neutral to earnings this fiscal year.