Colin Cieszynski
The Before the Bell report is compiled by editors of The Globe and Mail and is updated throughout the morning to reflect latest developments. Colin Cieszynski, Chartered Financial Analyst and Chartered Market Technician, is chief market strategist with CMC Markets.
A catch up rally overnight to start the week in Asia Pacific markets hasn't carried through to U.S. and European indices which are trading down moderately this morning in what looks like normal backing and filling after last week's big bounces.
It shouldn't come as a surprise to anyone after Friday's 8-per-cent one-day gains that the biggest correction this morning has been in crude oil. Saudi Aramco indicating it intends to maintain current capital investment has been blamed as the excuse for the retrenchment. Considering that Brent and West Texas Intermediate have retraced a little less than half of Friday's moves up and are holding $30 (U.S.), so far this looks like a common retest in an emerging uptrend.
The pullback in risk markets has defensive plays like the Japanese yen and gold on the rebound. Copper is also trading moderately higher this morning. This means that we could potentially see a split in Canada stock action today with energy stocks potentially coming under pressure while miners could bounce back. Eldorado Gold may attract attention after 2015 production exceeded guidance but the company guided for production to fall in 2016.
Russia reported a big drop in gross domestic product this morning, a sign of how hard some oil producing economies were hit last year (sanctions didn't help either). Between that bad news and the oil pullback, the Russian ruble has been getting hammered again today while other oil currencies like the Canadian dollar and the Norwegan krone are down only slightly, another sign that the market sees today's oil drop as a normal trading correction not a resumption of the previous downtrend.
There's not much in the way of economic news due today in North America as the east coast digs out from the weekend snow storm. Corporate earnings will likely be in focus as we move into the peak weeks of earnings season. Traders may also look ahead to the Federal Open Market Committee meeting and GDP reports due later in the week.
Now, here is a closer look at key market data, and corporate and economic news.
MARKET DATA:
Futures
S&P 500 -0.24 per cent; Dow -0.27 per cent; Nasdaq: -0.27per cent
Equities
Hong Kong's Hang Seng +1.36 per cent
Shanghai composite index +0.77 per cent
Japan's Nikkei 225 +0.90 per cent
London's FTSE -0.02 per cent
Germany's DAX +0.03 per cent
France's CAC 40 -0.11 per cent
Commodities
WTI crude oil (Nymex March) -2.67 per cent at $31.33 (U.S.) a barrel
Gold (Comex February) +0.83 per cent at $1,105.40 (U.S.) an ounce
Copper (Comex March) +0.52 per cent at $2.01 (U.S.) a pound
Currencies
Canadian dollar -0.19 at 70.53 cents (U.S.)
U.S. dollar index -0.10 at 99.47
Bonds
U.S. 10-year Treasury yield +0.029 at 2.05 per cent
KEY ECONOMIC RELEASES
Japan trade balance and leading index
KEY CORPORATE NEWS
Four senior Twitter executives are leaving the media company, CEO Jack Dorsey tweeted late Sunday night, the biggest leadership changes since Dorsey returned as chief executive as he struggles to revive the company's growth.
Media head Katie Jacobs Stanton, product head Kevin Weil, the head of the engineering division, Alex Roetter, and HR head Brian "Skip" Schipper will all leave the company, he said.
Johnson Controls Inc., a U.S. maker of car batteries and heating and ventilation equipment, said it would merge with Ireland-based fire protection and security systems maker Tyco International Plc.
Valeant Pharmaceuticals International Inc.'s ailing chief executive, Michael Pearson, said in a company memo he was on the road to recovery but was uncertain about when he would return from medical leave.
Eldorado Gold Corp., which suspended mine construction and development in Greece after a year of confrontations with the country's government, said it expects to write down the value of its assets in the country by $1.2 billion-$1.6 billion.
Ford Motor Co. said on Monday it will close all operations in Japan and Indonesia this year as it sees "no reasonable path to profitability" in the two countries where it has struggled to gain market share.
The company is awaiting an official decision on a mining permit in northern Greece, which the government revoked on environmental concerns.
Pearson, who joined Valeant as CEO in 2010 after a 23-year career at consultancy McKinsey & Co, was hospitalized with severe pneumonia in late December.
Iran Air needs to buy at least 20 regional jets as it upgrades its fleet now that economic sanctions on the country have been lifted, and Bombardier Inc. has already made a presentation to the carrier, chairman and managing director Farhad Parvaresh said.
Sears Canada Inc. is stepping up its efforts to close another round of stores, raising more questions about its fate and putting pressure on landlords who already have a lot of empty retail space.
Earnings include: Affiliated Managers Group Inc.; Amgen Inc.; Brown & Brown Inc.; Halliburton Co.; Kimberly-Clark Corp.; McDonald's Corp.
Also see: Friday's small-cap stocks to watch
ANALYST ACTIONS:
Twitter price target lowered to $26 (U.S.) from $34 at Sun Trust following a management shakeup.
Citi downgraded Dow Chemical to "neutral" from "buy."
With files from wire services