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.
Stock markets around the world have carried the torch of positive momentum from Thursday's U.S. session into this morning, with London's FTSE, Germany's Dax and Hong Kong's Hang Seng posting moderate gains in the 0.3 per cent to 0.8 per cent range. North American traders appear set to keep the rally going this morning, with Dow Futures up about 45 points and S&P futures trading up about 5 points.
Traders continue to respond positively to this week's confirmation from the Fed that members are looking at two rate hikes this year rather than four. The news has knocked the U.S. dollar back down, taking some of the forex pressure off of U.S. companies by increasing the value of their exports and earnings. Comments out of the European Central Bank this morning indicating that last week's rate cuts were necessary and that the central bank has more stimulus ammunition in its arsenal has helped to support stocks across the pond.
Crude oil continues to advance as well today with West Texas intermediate regaining the $40 (U.S.) a barrel level for the first time in three months, providing more evidence to indicate that it has turned the corner amid falling U.S. shale production and the potential for a producers' meeting in April. Gains in crude has propelled oil-sensitive currencies like the Canadian dollar and Russian ruble (which is also benefitting from a Bank of Russia decision to hold rates at 11.0 per cent) to the top of the leaderboard. The U.S. dollar this morning, meanwhile, also appears to be stabilizing, which has sparked a slight downward correction in gold.
Stocks in Canada have the potential to be particularly active today. In addition to the potential tailwind for oil stocks from the oil rally, a big acquisition by TransCanada late Thursday could spark action in the pipeline sector. Its U.S.-listed shares in the premarket are down nearly 4 per cent, with investors no doubt worried about the high cost of the $10.2-billion (U.S.) deal and the equity dilution associated with it.
Canada retail sales and consumer price inflation reports came out this morning, providing another indication on how Canada's economic transition is going ahead of next week's federal budget and how much pressure the Bank of Canada is under to cut interest rates again following the central bank of Norway's cut earlier this week. Retail sales were much stronger than the Street expected for January. The inflation reading for February was close to expectations.
We also get three Fed speakers today (William Dudley, Eric Rosengren and James Bullard) who would be expected to confirm the Fed's more dovish stance on interest rates.
Now, here is a closer look at key market data, as well as the main corporate and economic news of the morning.
MARKET DATA:
Futures
Dow +0.26 per cent; S&P 500 +0.27 per cent; Nasdaq: +0.23 per cent; TSX 60 +0.18 per cent
Equities
Japan's Nikkei 225 -1.25 per cent per cent
Shanghai composite index +1.72 per cent
Hong Kong's Hang Seng +0.82 per cent
Germany's DAX +0.29 per cent
London's FTSE +0.46 per cent
France's CAC 40 +0.40 per cent
Commodities
WTI crude oil (Nymex April) +1.72 per cent at $40.89 (U.S.) a barrel
Gold (Comex April) -0.80 per cent at $1,254.90 (U.S.) an ounce
Copper (Comex April) +0.37 per cent at $2.30 (U.S.) a pound
Currencies
Canadian dollar +0.0029 at 77.25 cents (U.S.)
U.S. dollar index +0.139 at 94.899
Bonds
U.S. 10-year Treasury yield -0.02 at 1.88 per cent
KEY ECONOMIC RELEASES
Canadian retail sales in January rose at the fastest pace in almost six years, driven by car sales. Sales rose 2.1 per cent to $44.2 billion, Statistics Canada said, the biggest gain since March 2010. Economists surveyed by Bloomberg News had anticipated a 0.6 per cent gain.
Canadian inflation slowed in February as consumers benefited from falling gasoline prices and a rebound in the currency tempered prices for imported goods. The consumer price index rose 1.4 per cent in February from a year earlier, down from a pace of 2 per cent in the prior month, Statistics Canada said. The core rate which strips out prices for gasoline and other volatile items fell to 1.9 per cent from 2 per cent. On a monthly basis, total inflation advanced 0.2 percent in January and the core rate -- which excludes volatile items like gasoline -- rose 0.5 per cent. Economists surveyed by Bloomberg predicted that overall monthly prices would rise 0.4 per cent and the core rate would gain 0.5 per cent.
Still to come:
(10 a.m. ET) University of Michigan's consumer sentiment index, which is expected at 92.2 for March, improving from a final reading of 91.7 last month.
KEY CORPORATE NEWS
TransCanada U.S.-listed shares are down 3.5 per cent in the premarket after the company late Thursday announced it is buying Houston-based Columbia Pipeline Group Inc. for $10.2-billion (U.S.) in cash to give it a major position in a massive shale gas region in the U.S. Northeast. TransCanada will fund part of the transaction, the largest in Canada this year, with a $4.2-billion (Canadian) sale of subscription receipts, to be exchanged for stock when the deal closes. It is offering $25.50 (U.S.) per Columbia share, representing a 32-per-cent premium to the average price of the U.S. firm's stock over the past 30 days.
Canada's BRP Inc. forecast a 4-8 per cent increase in full-year revenue, helped by new launches. It also reported a higher-than-expected adjusted profit for its fourth quarter ended Jan. 31 of 75 cents (Canadian) per share. Analysts on average had estimated earnings of 68 Canadian cents.
Bank of America Corp said its board has authorized share repurchase of up to $800 million (U.S.), in addition to the $4 billion share buyback announced earlier.
Starwood Hotels & Resorts Inc said it planned to terminate a deal to be acquired by Marriott International Inc after it received a superior proposal from a group led by China's Anbang Insurance Group. The Anbang-led group has raised its offer for Starwood to $78.00 per share in cash from $76.00.
Tiffany & Co., the luxury jewelry retailer, gave a forecast for earnings this year that trailed analysts' estimates as the sluggish global economy damps sales. At best, earnings in the current fiscal year will be unchanged from last year's $3.83 a share, the New York-based company said in a statement Friday. Analysts estimated $3.86, on average. Shares are up 1.2 per cent in the premarket.
Shares of Adobe were up 5.8 per cent at $95.19 premarket after the Photoshop maker raised its full-year profit and revenue forecasts above expectations.
Other earnings today include: Diversified Royalty Corp.; Sabina Gold and Silver Corp.; Sears Canada.
Also see: Friday's small-cap stocks to watch
With files from wire services