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.
The big turnaround in crude oil that started Tuesday afternoon continued overnight and into this morning.
A number of factors have converged to bring West Texas intermediate's recent losing streak to an end and indicate it was a trading correction after a big advance, rather than a new, sustainable downturn. Oversold technical indicators indicated previous overbought signals had been unwound, suggesting the correction had run its course. This coincided with talk out of Russia and Kuwait supporting a production freeze deal at the upcoming oil producers meeting, and a drawdown in this week's US American Petroleum Institute inventories. Oil may remain active today, particularly around the Department of Energy inventory report later this morning.
The correction in oil had been dragging on stock markets and the rebound has brought support back to equities. Asia Pacific and European indexes have stabilized, with London's FTSE up 0.4 per cent and Germany's Dax down 0.4 per cent. U.S. markets are slightly positive, with the Dow and SPX 500 trading up about 0.2 per cent. Better-than-expected China service Purchasing Managers Index and German industrial production data have also helped to shore up support for stocks.
Even though earnings season doesn't start until next week, we could see significant action in individual stocks and sectors today. Traders may look to energy stocks for confirmation or rejection of the commodity price rebound. Potential merger troubles may also drive action after the Pfizer/Allergan pharmaceutical deal came untied and reports that the U.S. government may oppose the proposed merger between oilfield service providers Halliburton and Baker Hughes. Valeant Pharmaceuticals may also be active again today after the company rallied Tuesday on the news that it has no additional restatements to make and has disbanded the committee that had been reviewing its finances.
Economic news for North America is due out later in the day than usual, which could keep markets hopping well into the session. The Canadian dollar could be active around the Ivey PMI report due mid-morning, with Canada employment numbers due on Friday. Action in crude oil may also influence trading in the Canadian dollar and other oil-sensitive currencies. So far today, the loonie is down about 0.3 per cent against the U.S. dollar and Japanese yen, and up about 0.3 per cent against the British pound.
This afternoon, minutes from the last FOMC minutes could influence U.S. dollar trading a bit, but probably won't be a huge event. The minutes may give more colour as to why the Fed decided to slow its rate normalization program, but they likely won't change speculation on future rate hikes since so many Fed speakers since then, including Chair Janet Yellen and many of the doves at the Fed, have coalesced around a projection of two rate hikes this year in recent weeks.
Now, here is a closer look at key market data, and corporate and economic news.
MARKET DATA: (as of 715 a.m. ET)
Futures
Dow +0.14 per cent; S&P 500 +0.17 per cent; Nasdaq: +0.18 per cent; TSX 60 +0.37 per cent
Equities
Japan's Nikkei 225 -0.11 per cent
Shanghai composite index -0.08 per cent
Hong Kong's Hang Seng +0.15 per cent
Germany's DAX -0.30 per cent
London's FTSE +0.49 per cent
France's CAC 40 +0.19 per cent
Commodities
WTI crude oil (Nymex May) +2.90 per cent at $36.93 (U.S.) a barrel
Gold (Comex June) -0.24 per cent at $1,226.60 (U.S.) an ounce
Copper (Comex May) -0.12 per cent at $2.13 (U.S.) a pound
Currencies
Canadian dollar -0.0017 at 75.95 cents (U.S.)
U.S. dollar index +0.281 at 94.912
Bonds
U.S. 10-year Treasury yield +0.03 at 1.75 per cent
KEY ECONOMIC RELEASES
(10 a.m. ET) Canada Ivey Purchasing Managers' Index for March
(2 p.m. ET) U.S. Federal Open Market Committee (FOMC) minutes from March 15-16 meeting released.
(10:30 a.m. ET) EIA petroleum status report
KEY CORPORATE NEWS
Constellation Brands Inc reported better-than-expected quarterly net sales, helped by strong demand for its premium Corona and Modelo beer brands. Shares of the company rose 2.14 per ent to $154.6 in premarket trading on Wednesday. The company also forecast earnings of $6.05-$6.35 per share for the year ending February 2017, largely above analysts' average expectation of $6.11, according to Thomson Reuters I/B/E/S.
Monsanto Co. on Wednesday reported fiscal second-quarter net income of $1.06 billion. The St. Louis-based company said it had profit of $2.41 per share. Earnings, adjusted for one-time gains and costs, were $2.42 per share. The average estimate of 10 analysts surveyed by Zacks Investment Research was for earnings of $2.45 per share.
Cisco shares were up 1.9 per cent in the premarket after JP Morgan raised its rating on the stock to neutral.
Allergan fell 2.3 per cent in the premarket, continuing its slide from Tuesday, after new rules aimed at curbing tax inversions effectively killed its $160 billion merger with Pfizer. Pfizer shares rose 0.8 per cent.
Earnings include: Acuity Brands Inc.; Bed Bath & Beyond Inc.; Global Payments Inc.; Monsanto Co.; MTY Food Group Inc.; Qihoo 360 Technology Co Ltd.; RPM International Inc.; Sirius XM Canada Holdings Inc.
With files from wire services