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.
U.S. stocks are steady to start their trading week following the Memorial Day holiday, with Dow and S&P 500 futures up marginally. Futures for the TSX 60 are also just barely higher. Canadian banks could attract more attention today, as Bank of Nova Scotia reported results that were not as bad as feared despite restructuring charges. According to Bloomberg, its adjusted profit per share was $1.48 versus the Street consensus of $1.42. In light premarket volume, its U.S.-listed shares are trading slightly in positive territory.
Traders continue to digest Federal Reserve Chair Janet Yellen's comments from Friday, which confirmed the central bank is heading for a rate increase soon.
Today's U.S. personal spending and personal income and outlays inflation figures, plus employment and purchasing managers index reports later in the week, may give a better indication if a rate hike is more likely in June or July. U.S. consumer spending surged 1.0 per cent last month, beating economists' expectations for a 0.7 per cent rise. The U.S. personal consumption expenditures (PCE) price index, excluding the volatile food and energy components, rose 0.2 per cent last month after edging up 0.1 per cent increase in March. The data today suggest a near-term rate hike is still on the table.
European markets are trading slightly lower, with the Dax and CAC down 0.2 per cent to 0.3 per cent. In an ongoing sign of who is winning and who is losing from being in the euro zone, Germany's employment figures were better than expected while Italy's were worse than expected.
U.K. markets are down only slightly today as traders return from a holiday across the pond as well. Weekend reports suggested that Prime Minister David Cameron's tenure as Conservative leader could come under fire regardless of which side wins the upcoming Brexit referendum. Meanwhile, an ORB poll released this morning shows the Leave side gaining momentum, with results indicating Remain's lead narrowing to 51 per cent to 46 per cent from 55 per cent to 42 per cent last week. There was a brief downdraft in the British pound, but that ended quickly with Sterling already bouncing back. This action shows that fewer and fewer traders are concerned about negative implications of a Leave win, tuning out the overblown calls of doom from some quarters.
Brent and West Texas Intermediate crude oil are holding steady just below $50 (U.S.) per barrel ahead of Thursday's OPEC meeting, and the Canadian dollar is also steady. Gold has bounced back slightly off of $1,200 (U.S.) support.
Now, here is a closer look at what's going on this morning and what is still to come.
MARKET DATA:
Futures
Dow +0.11 per cent; S&P 500 +0.02 per cent; Nasdaq: +0.14 per cent; TSX 60 +0.06 per cent
Equities
Japan's Nikkei +0.98 per cent
Shanghai composite index +3.32 per cent
Hong Kong's Hang Seng +0.90 per cent
Germany's DAX -0.35 per cent
London's FTSE -0.14 per cent
France's CAC 40 -0.32 per cent
Commodities
WTI crude oil (Nymex July) +0.28 per cent at $49.47 (U.S.) a barrel
Gold (Comex Aug) -0.23 per cent at $1,213.90 (U.S.) an ounce
Copper (Comex July) -0.71 per cent at $2.09 (U.S.) a pound
Currencies
Canadian dollar -0.07 at 76.54 cents (U.S.)
U.S. dollar index +0.091 at 95.612
Bonds
Canada 10-year bond yield +0.013 at 1.366 per cent
KEY ECONOMIC RELEASES
Canadian first-quarter GDP expanded at an annualized 2.4 per per cent vs. an estimated 2.8 per cent growth. March GDP shrank 0.2 per cent vs. an estimated 01. per cent drop.
The U.S. Commerce Department said consumer spending surged 1.0 per cent last month as households bought automobiles and a range of other goods and services. Consumer spending in March was revised down to show it being flat instead of the previously reported 0.1 per cent gain. Last month's increase was the largest since August 2009 and beat economists' expectations for a 0.7 per cent rise. When adjusted for inflation, consumer spending shot up 0.6 per cent, the biggest gain since February 2014, after being flat in March.
The U.S. personal consumption expenditures (PCE) price index, excluding the volatile food and energy components, rose 0.2 per cent last month after edging up 0.1 per cent increase in March. In the 12 months through April the core PCE rose 1.6 per cent after a similar increase in March. The core PCE is the Fed's preferred inflation measure and is running below the U.S. central bank's 2 per cent target.
(9 a.m. ET) U.S. S&P Case-Shiller Home Price Index for March. Consensus is an increase of 0.7 per cent from February and 5.1 per cent year over year.
(9:45 a.m. ET) U.S. Chicago PMI for May. Consensus is 51.0, up from 50.4 in previous month.
KEY STOCKS TO WATCH
Bank of Nova Scotia said fiscal second-quarter profit fell 12 per cent after recording restructuring charges from job cuts and its shift toward digital banking. Net income for the period ended April 30 slid to $1.58 billion, or $1.23 a share, from $1.8 billion, or $1.42, a year earlier. Scotiabank said profit excluding some items was $1.48 a share, beating the $1.42 average estimate of 14 analysts surveyed by Bloomberg. In light premarket volume, its U.S.-listed shares are trading slightly in positive territory.
Other earnings today include: Medtronic PLC; Volkswagen AG; Workday Inc.
Also see: Tuesday's small-cap stocks to watch
With files from wire services