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.
For the most part, stock markets have been holding steady overnight ahead of a series of big announcements due through the morning that could have a significant impact on trading. The Nikkei fell 2.4 per cent as the Japanese Yen rallied, putting pressure on exporters. European indexes like the FTSE and Dax are up slightly today. Spain's IBEX has popped 1.0 per cent on the back of very strong job gains in that country ahead of this month's election. U.S. index futures are down marginally amid today's ADP payrolls report, which along with Friday's nonfarm payrolls report, are key updates on the U.S. labour market and data sure to fuel further Fed rate hike speculation.
Brent and West Texas intermediate crude have been holding overnight in the upper half of a $48 and $50 range ahead of today's OPEC meeting. There has been some talk that the cartel may try to bring back a production quota after abandoning previous policy in December. If they do, it's likely to be higher than before, as OPEC production has increased significantly since then. We could hear some calls for cuts from some struggling smaller members, particularly Venezuela - but really, it's Saudi Arabia and Iran that need to agree in order to bring everyone else into line, just as their failure to agree scuttled hopes of a production freeze at the Qatar meeting back in April. Saudi Arabia with a new oil minister appear open to a new ceiling, but Iran remains opposed while still ramping up production following the lifting of sanctions earlier this year.
A decision on production quotas at OPEC could be seen as a surprise, while comments from member countries could spark short-term swings. The oil-sensitive Canadian dollar is trading lower relative to the greenback so far today. Later this morning, weekly U.S. Department of Energy oil and gasoline inventories plus U.S. Energy Information Administration natural gas storage are all due, with traders expecting a smaller drop in stockpiles for crude than last week. With all of this news on the way, it could be a big day for trading in oil, oil currencies and energy stocks.
Thursday morning also brings a European Central Bank meeting plus a number of opportunities for comment from ECB President Mario Draghi ahead of this month's UK Brexit referendum and Spanish election. Traders may look for comments on whether quantitative easing and negative rates are working to stimulate the euro zone economy or not. Spain posted really strong 119,000 job growth last month but Mr. Draghi may still join the OECD, which yesterday called for more fiscal measured to boost economies with monetary policy nearing the limits of what it can do. Also traders may be watching for whether Mr. Draghi jumps on the bandwagon or avoids the temptation to threaten the U.K. ahead of the Brexit vote (threats which are increasingly being ignored by the markets) or if he makes any prediction on how a Brexit vote could impact the euro zone. The British pound has stabilized against both the U.S. dollar and euro today in the wake of a series of polls showing the Leave side gaining momentum and a really close race overall runs its course.
Now, here is a closer look at what's going on this morning, including how the economic numbers have come in so far.
MARKET DATA:
Futures
Dow -0.06 per cent; S&P 500 -0.05 per cent; Nasdaq: -0.05 per cent; TSX 60 +0.13 per cent
Equities
Japan's Nikkei -2.32 per cent
Shanghai composite index +0.40 per cent
Hong Kong's Hang Seng +0.47 per cent
Germany's DAX +0.11 per cent
London's FTSE +0.41 per cent
France's CAC 40 +0.03 per cent
Commodities
WTI crude oil (Nymex July) -0.02 per cent at $49.00 (U.S.) a barrel
Gold (Comex Aug) +0.34 per cent at $1,218.80 (U.S.) an ounce
Copper (Comex July) -0.39 per cent at $2.06 (U.S.) a pound
Currencies
Canadian dollar -0.14 at 76.31 cents (U.S.)
U.S. dollar index -0.13 at 95.30
Bonds
Canada 10-year bond yield -0.014 at 1.288 per cent
KEY ECONOMIC RELEASES
Companies added 173,000 workers to payrolls in May following a revised 166,000 rise in the prior month, figures from the ADP Research Institute in Roseland, New Jersey, showed Thursday. The median forecast of 45 economists surveyed by Bloomberg called for an advance of 173,000. Estimates ranged from gains of 105,000 to 205,000. The prior month's figure was previously reported as a gain of 156,000.
Filings for U.S. unemployment benefits declined for a third consecutive week, signaling sustained firming in the labor market. Jobless claims fell by 1,000 to 267,000 in the week ended May 28, a Labor Department report showed Thursday. The median forecast of economists surveyed by Bloomberg called for applications to edge up to 270,000.
Still to come:
(11 a.m. ET) EIA petroleum status report
KEY STOCKS TO WATCH
Canadian Western Bank reported strong growth in pre-tax, pre-provision earnings in the second quarter and the"significant negative impact" of low oil prices on the credit performance of oil and gas production loans. The bank said net income from continuing operations was $32.2 million, down 37 per cent compared to the same quarter in 2015.
Bank of Montreal says it expects to grow its U.S. mergers and acquisitions business through the purchase of a Minneapolis-based advisory firm, which will become part of BMO Capital Markets. The bank says it has a definitive agreement to acquire Green Holcomb Fisher, a boutique M&A advisory firm. BMO says the financial terms aren't being made public.
Johnson & Johnson said it would acquire Vogue International for $3.3 billion, adding brands such as OGX shampoos and FX hair styling products to its consumer portfolio that includes Neutrogena and Clean & Clear.
Mining equipment maker Joy Global Inc reported a drop in revenue for the 13th straight quarter and lowered its forecast for 2016 as customers cut spending amid a slump in commodity prices. The company said it now expected 2016 sales at the lower end of its previous outlook of $2.4 billion-$2.6 billion. Adjusted earnings were also pegged at the bottom end of its previously expected range of 10-50 cents per share.
Oracle was down 3.1 per cent at $39 in the premarket after it was sued by a former senior finance manager who claimed she was terminated in retaliation for complaining about improper accounting practices.
Cloud storage provider Box slumped 12.2 per cent to $11.25 in the premarket after the company reported a slowdown in billings growth in the first quarter.
Other earnings today include: 58.com Inc.; Canadian Western Bank; Ceres Global Ag Corp.; Ciena Corp.; Cooper Companies Inc.; PWC Capital Inc.; Saputo Inc.; VersaBank
Also see: Thursday's small-cap stocks to watch
With files from wire services