Markets expected to begin on a down note

(September 13 – 9:00 ET) – The markets appear set for a lower opening this morning, with interest rate fears and a weaker US$ driving the concern. The Asian markets closed higher, but Europe is down this morning and S&P futures are pointing south as well.

With renewed confidence in the Japanese recovery, the yen is unstoppable these days. It was up again strongly overnight against the US$ and the euro. Despite intervention by the Bank of Japan on Friday to restrain it, the yen reached a three-year high against the dollar last night.

While this has sparked confidence in the Asian markets, it has raised worries in the European and U.S. markets. Interest rates are the big concern, since a decline in the US$ could coax the Fed to raise rates to defend the currency. This simply adds to other concerns about inflation. The U.S. releases its CPI report later this week. There are no major releases either here or in the U.S. today.

Markets are down across Europe. The FTSE 100 in London has dropped 59 points so far. Paris’ CAC 40 is off about 45 points and the German DAX index has slipped 38 points. The big business news in Europe is that Total Fina SA has won the struggle for Elf Aquitaine by upping its bid to US$54 billion – a deal that would creates the fourth-biggest energy company. This should inject some interest into the already-interesting energy stocks.

The renewed strength of Japan drove the Nikkei index to close up by 198 points. The Hang Seng index was down much of the day, under siege by profit takers, but it managed to claw its way into positive territory to close up five points.

Today’s other big merger news is a report in the Wall Street Journal that has Motorola Inc. buying set-top box maker General Instrument Corp. for US$10 billion in stock.

In other techology news, Canada’s biggest firm, Nortel Networks, says that it will begin reporting its results in accordance with both U.S. and Canadian GAAP in 2000. Its chief financial officer also reported, “We expect our revenue growth will exceed the market growth rate of 14% to 15% by about 3 percentage points, and anticipate growth in our earnings per share from operations to be faster than our revenue growth.” Expect to see some interest there.

Laidlaw says it will increase its focus on its bus operations by selling off its U.S. healthcare businesses and it stake in Safety-Kleen
Corp.