A series of scandals at Valeant apparently wasn’t enough to scare off suitors. The drugmaker reportedly rejected a takeover offer by Takeda Pharmaceutical and TPG in the spring. Even though the suitors were rebuffed, the prospect of a deal is lifting the company’s stock in extended trading.
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 paused overnight with the Dax, FTSE, other European indexes and U.S. and Canadian index futures all pretty much flat as traders await comments from Fed Chair Janet Yellen.
The G7 meeting wrapped up overnight with the usual comments about using a range of tools to grow economies and not using competitive currency devaluations. A push by host Japan for a more aggressive response to a perceived crisis didn't get anywhere, but reports suggest Japan is now prepared to postpone a sales tax increase scheduled for next year. A comment on potential Brexit risks was thrown in as an afterthought at the last minute, likely as a bone to Prime Ministers David Cameron and Shinzo Abe, and completely ignored by the market.
Crude oil has fallen back a bit from $50 (U.S.) a barrel in what looks like a normal trading correction. It continues to face considerable resistance at that big round number ahead of next week's OPEC meeting and with traders speculating a price somewhere above there could be enough to encourage some U.S. producers to re-enter the market. The oil-sensitive Canadian dollar is down about a third of a U.S. cent this morning in a quiet day for global forex trading. Crude weakness may also put a bit of pressure on energy stocks to wrap up the week.
Focus now turns to U.S. markets and more speculation on whether the Fed will raise interest rates in June. A GDP update this morning showed U.S. economic growth slowed in the first quarter although not as sharply as initially thought. Ms. Yellen's speech could carry significant weight with traders. This is her first public appearance since the hawkish turn in FOMC member comments amid stronger U.S. data and Fed minutes over the last two weeks. Ms. Yellen is usually associated with the dovish camp and it will be interesting to see if she stays dovish in a bid to maintain some balance in the outlook, or if like Governor Jerome Powell Thursday, she joins the chorus calling for a rate hike soon (likely June or July).
In Toronto, look for an active day in shares of Valeant Pharmaceuticals. Its U.S.-listed shares are up 8 per cent in the premarket on a Reuters report quoting a source as saying the company received a joint takeover offer this spring from Japan's Takeda Pharmaceutical and TPG Capital Management that the Canadian drug maker rejected.
Now, here is a closer look at what's going on this morning and what is still to come.
MARKET DATA:
Futures
Dow +0.12 per cent; S&P 500 +0.11 per cent; Nasdaq: +0.22 per cent; TSX 60 +0.07 per cent
Equities
Japan's Nikkei +0.37 per cent
Shanghai composite index -0.03 per cent
Hong Kong's Hang Seng +0.88 per cent
Germany's DAX +0.14 per cent
London's FTSE +0.03 per cent
France's CAC 40 +0.05 per cent
Commodities
WTI crude oil (Nymex July) +0.83 per cent at $49.07 (U.S.) a barrel
Gold (Comex Aug) -0.07 per cent at $1,221.80 (U.S.) an ounce
Copper (Comex July) +0.74 per cent at $2.12 (U.S.) a pound
Currencies
Canadian dollar -0.37 at 76.69 cents (U.S.)
U.S. dollar index +0.101 at 95.269
Bonds
Canada 10-year bond yield -0.057 at 1.32 per cent
KEY ECONOMIC RELEASES
U.S. economic growth slowed in the first quarter although not as sharply as initially thought, amid a surge in spending on home building and a steady increase in inventory investment by businesses. Gross domestic product rose at a 0.8 per cent annual rate as opposed to the 0.5 per cent pace reported last month, the Commerce Department said in its second GDP estimate on Friday. It was the weakest performance since the first quarter of 2015.
Still to come:
(10:30 a.m. ET) U.S. Fed chair Janet Yellen interview during Radcliffe Day luncheon in Cambridge, Mass.
(1 p.m. ET) Baker-Hughes rig count.
KEY STOCKS TO WATCH
Valeant Pharmaceuticals International Inc received a joint takeover offer from Japan's Takeda Pharmaceutical Co Ltd and TPG Capital Management LP this spring that the Canadian drug maker rejected, according to a source familiar with the matter, Reuters is reporting this morning. U.S.-listed shares of Valeant are up 8 per cent in the premarket on the report.
Loblaw Co. says it's taking steps to sell its network of 212 gasoline-filling stations. The company says it will "engage potential buyers," but didn't provide an estimated pricetag or other details of its plan.
With files from wire services