Stocks are looking at a negative open this morning, driven by negative sentiment in the U.S. market, after Microsoft Corp. and Sun Microsystems Inc. lowered their profit forecasts after the bell last night.

In earnings news, PepsiCo reported that its profit rose 11%. UAL Corp. saw its quarterly loss widen to US$341 million. And R.J. Reynolds Tobacco Holdings Inc. has issued a profit warning.

In economic news, U.S. consumer inflation came in at just 0.1%, in line with analysts expectations. The number confirms that U.S. inflation is a non-starter, and theres no need to hike interest rates. Also this morning, it was reported that the U.S. trade gap increased to US$37.6 billion due to increased imports of cars, clothes and TVs.

Meanwhile, Canada’s merchandise trade balance fell nearly $1 billion in May, the eighth decline in the past 12 months and the largest single monthly drop since February 2001. The trade balance decreased from $5.5 billion in April to just over $4.5 billion in May, in the wake of a decline in exports and an increase in imports. The trade surplus with the U.S. alone plunged $826 million.

Also, after strong growth in April, wholesale sales fell 1.2% in May. During the month, wholesalers sold $34.5 billion worth of goods and services. May’s decline followed six months of consecutive growth. Despite the drop, the upward trend continued both for total sales and for nine of the eleven wholesale sectors. In constant dollars, wholesale sales fell only 0.5%. Lower prices in the motor vehicles, parts and accessories, and the lumber and building materials sectors contributed the most to containing the drop in sales.

In Europe, stocks are already trading notably lower, hit by the Microsoft and Sun Micro news, but also Ericsson AB reported its fifth straight quarterly loss and unveiled plans to raise US$3.3 billion by issuing new equity. As well,Italian consumer confidence dropped to its lowest level in more than three years in July. The FTSE is down 153 points to 4,144. The CAC 40 has dropped 132 points to 3,382. The DAX is down 166 points to 3,935.

Overnight in Asia, stocks were weaker once again. The Nikkei finished the week down 296 points to 10,202. The Hang Seng is down 127 points to 10,325.