Euphoria over victory in Baghdad has been short lived as investors wake up to economic realities back home.

Several large American retailers, such as Wal-Mart are reporting negative quarterly earnings. Meanwhile, U.S. initial jobless claims for last week came in at 405,000. That’s less than the 425,000 number that was expected, but it’s still above the 400,000 comfort level.

Analysts and commentators have made much of the Canadian stance on Iraq, but America will have its own fences to mend. Toppling Saddam has cost many lives, both military and civilian, but no evidence of weapons of mass destruction has been found. As this fact becomes more apparent, analysts say American companies are likely to face their own backlash, especially in Europe.

Wall Street retreated Wednesday and the major Asian markets followed suit. In Japan, the Nikkei Stock Average closed down 77.49 points, or 0.96%, at 7,980.12 points.

Hong Kong shares slipped as losses in banking issues offset minor gains in property companies. The Hang Seng Index fell 11.13 points, or 0.1%, to 8,625.72.

In London, the FTSE 100 has dipped 0.3% in Thursday morning trading. Paris’s CAC 40 fell 1.44%. Frankfurt’s DAX was the only rebel. It rose 0.58%.

Statistics Canada is reporting weaker export numbers for February. Merchandise exports fell 1.6% to just under $34.6 billion, while imports remained unchanged at $30 billion in February.

Canada’s trade surplus with the rest of the world dropped by half a billion dollars to $4.6 billion in February, the third decline in the past four months. Exports to the United States, which accounted for 84% of the total in February, fell 0.9% to $29.1 billion, while exports to the European Union (6% of the total) fell 11.6% to $2 billion.

Machinery and equipment exports fell 7.7% to $7.5 billion. The decrease was driven by a 23.9% drop in aircraft, engines and parts to $1.3 billion, the result of lower demand in the United States for smaller passenger and corporate aircraft due to the decline in the American airline industry.

In business news, Placer Dome is reporting that a new gold deposit in the Yukon is 60% larger than originally anticipated. The company’s stock is expected to benefit from the news.