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 been giving back yesterday's gains overnight and into this morning. The Nikkei fell 0.9 per cent while the Hang Seng was closed for the Dragon Boat festival. In Europe today, the Dax is down 1.2 per cent outpacing the FTSE's 0.9-per-cent decline to the downside. Losses in the U.S. have been minor so far with Dow and S&P futures falling about 0.3 per cent.
As with stocks the North American WTI price of oil is down less that the European Brent price of oil falling 0.8 per cent and 1.3 per cent respectively. So far this looks like a normal trading correction after both reached new 2016 highs yesterday on the back of a 3.2-million barrel (mmbbl) drawdown in U.S. inventories. Both contracts continue to attract support above $50 (U.S.) a barrel.
The U.S. dollar is on the rebound today against most other currencies, the one exception being New Zealand dollar which has soared after the Reserve Bank of New Zealand decided not to cut interest rates yesterday as had previously been expected. The Bank of Korea on the other hand, delivered a surprise 0.25 per cent rate cut. The British pound is down less than the euro while the Canadian dollar is down less than the Norwegian krone.
This suggests that traders are more concerned about the European economy after European Central Bank President Mario Draghi pleaded for more reforms indicating that monetary and fiscal policy need to be working together. Meanwhile, a big jump in German labour costs suggested that inflation pressures may be starting to build. Once again, Germany reported a higher than expected trade surplus as it continue to dominate its competitors and partners. Sweden household spending, meanwhile, continued an emerging global trend of growing consumer consumption also seen in recent U.S., U.K., Japanese and Eurozone data.
It's a relatively quiet day for economic news in North America. The loonie, however, could be active around a Bank of Canada financial systems review report, which is expected to touch on the hot housing market, set to be released later this morning and comments from Governor Stephen Poloz. Natural gas storage could spark some trading action in energy markets. U.S. jobless claims could give an update on the health of the American job market which remains in question after last week's non-farm payrolls report.
Now, here is a closer look at what's going on this morning and what is still to come.
MARKET DATA:
Futures (as of about 7:15 a.m. ET)
Dow -0.23 per cent; S&P 500 -0.31 per cent; Nasdaq: -0.27 per cent; TSX 60 -0.37 per cent
Equities
Japan's Nikkei -0.97 per cent
Shanghai composite index -0.32 per cent
Hong Kong's Hang Seng -0.14 per cent
Germany's DAX -1.19 per cent
London's FTSE -0.82 per cent
France's CAC 40 -0.77 per cent
Commodities
WTI crude oil (Nymex July) -0.78 per cent at $50.84 (U.S.) a barrel
Gold (Comex Aug) -0.02 per cent at $1,262.10 (U.S.) an ounce
Copper (Comex July) -0.12 per cent at $2.06 (U.S.) a pound
Currencies
Canadian dollar -0.29 at 78.53 cents (U.S.)
U.S. dollar index +0.30 at 93.88
Bonds
Canada 10-year bond yield -2.40 at 1.17 per cent
KEY ECONOMIC RELEASES
China consumer price index (CPI), producer price index (PPI), money supply, aggregate yuan financing and new yuan loans
Also: China markets closed
Japan machine orders
Germany trade surplus
(8:30 a.m. ET) Canada capacity utilization for Q1. Estimate is 81.3 per cent, up 0.2 per cent from Q4.
(8:30 a.m. ET) Canada new housing price index for April. Estimate is a rise of 0.2 per cent from previous month and 2.1 per cent year over year.
(8:30 a.m. ET) U.S. initial jobless claims for week of June 4. Estimate is 270,000, up 3,000 from week of May 28.
(10 a.m. ET) U.S. wholesale inventories for April. Consensus is a decline of 0.1 per cent from March.
(10:30 a.m. ET) Bank of Canada financial systems review. Governor Stephen Poloz to hold news conference at 11:15 a.m. ET.
KEY STOCKS TO WATCH
Suncor Energy Inc.'s $2.5-billion equity offering is two times oversubscribed, with the vast majority of shares going to dozens of institutional investors in North America and beyond, according to one of the leads in the syndicate. Suncor announced the bought deal on Tuesday. It sold 71.5 million shares at $35 apiece in its first-ever offering from treasury.
---
Glencore has agreed to sell a 9.99 per cent stake in its agricultural business to British Columbia Investment Management Corp for $624.9-million, as it continues a push to sell up to $5-billion worth of assets this year to help cut debt.
---
Women's wear chain Jones New York has become another victim of the increasingly intense apparel retail market. Jones New York, whose rights in Canada were bought almost a year ago by a subsidiary of men's clothing retailer Grafton-Fraser Inc., filed for court protection from its creditors this week. Unable to find a buyer, it plans to close all 37 Jones New York stores in Canada, the filing says.
---
Earnings include: BRP Inc.; Enghouse Systems Ltd.; H & R Block Inc.; Hudson's Bay Co.; J M Smucker Co.; Transat AT Inc.; Vail Resorts Inc
Also see: Thursday's small-cap stocks to watch
With files from wire services