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.
Futures are pointing to a higher start for Canada's main stock index today, as oil prices recover from sharp losses in the previous session. Gains are also being seen in U.S. stock index futures after a handful of companies, including banking giant JPMorgan & Chase, reported better-than-expected second-quarter earnings. Futures for the Dow and S&P 500 - which had already set fresh record highs on Wednesday - are up 0.8 per cent, with TSX 60 futures not far behind.
Finding the right tone that signals the support of economies while avoiding signs of panic that could undermine confidence has been the key theme of overnight news, particularly in the U.K. and Japan.
More talk about potential helicopter money stimulus in Japan through the issue of perpetual debt sent the Japanese yen lower and the U.S. dollar versus the yen up through 105 while helping to send the Nikkei and Hang Seng to 1 per cent gains.
European markets traded higher as well on UK stimulus expectations, but have backed off after the Bank of England decided not to pull the trigger on a rate cut just yet. While the Dax is trading up more than 1 per cent, gains in London's FTSE since the Bank of England announcement have now nearly evaporated as the opening bell approaches.
The Bank of England and the UK's new Chancellor of the Exchequer Phillip Hammond have been walking a tightrope this morning, trying to signal plans to support the UK economy as needed through the Brexit process but at the same time trying to avoid hitting the panic button. Chancellor Hammond, for example, indicated that he has no plans to bring in an emergency budget and that he would update plans at the usual fall statement. He hinted that he is likely to back off on austerity (going in the opposite direction of his predecessor George Osborne).
To the surprise of many, but not myself, the Bank of England did not cut interest rates today, holding the line in an 8-1 vote with only one dovish dissenter. The bank did indicate that it is seriously looking at a stimulus move for its August meeting. The three-week delay on possible stimulus gives the Bank more time to assess the fallout from the Brexit vote on the economy plus the impact of the plunge in the pound - already a big stimulus boost for the UK economy. It went unsaid but holding off also gives them a chance to meet with the new finance ministry to sort out a co-ordinated response. Because the Street had been more dovish, the pound has jumped on the news as traders scramble to get back on side.
Commodity markets. particularly metals. may also be active today as traders await China GDP, retail sales and industrial production reports tonight.
Now, here is a closer look at what's going on this morning and what is still to come.
MARKET DATA: (as of about 8 a.m. ET)
Futures
Dow +0.84 per cent; S&P 500 +0.83 per cent; Nasdaq: +0.70 per cent; TSX 60: +0.65 per cent
Equities
Japan's Nikkei +0.95 per cent
Shanghai composite index -0.22 per cent
Hong Kong's Hang Seng +1.12 per cent
Germany's DAX +1.25 per cent
London's FTSE +0.20 per cent
France's CAC 40 +0.98 per cent
Commodities
WTI crude oil (Nymex Aug) +0.98 per cent at $45.19 (U.S.) a barrel
Gold (Comex Aug) -1.15 per cent at $1,328.20 (U.S.) an ounce
Copper (Comex July) +0.04 per cent at $2.241 (U.S.) a pound
Currencies
Canadian dollar +0.30 at 77.28 cents (U.S.)
U.S. dollar index -0.051 at 96.165
Bonds
Canada 10-year bond yield +0.027 at 1.030 per cent
KEY ECONOMIC RELEASES
Canadian new home prices in May grew at their fastest pace in almost nine years, soaring 0.7 per cent from April on strength in the booming markets of Toronto and Vancouver, Statistics Canada said on Thursday. Analysts polled by Reuters had predicted a 0.2 per cent advance. May's increase was the largest since the 1.0 per cent jump recorded in July 2007.
The number of Americans filing for unemployment benefits unexpectedly held at lower levels last week, pointing to further momentum in the labor market after job growth surged in June. Initial claims for state unemployment benefits were unchanged at a seasonally adjusted 254,000 for the week ended July 9, the Labor Department said on Thursday. Claims are near the 43-year low of 248,000 touched in mid-April. Economists polled by Reuters had forecast initial claims rising to 265,000 in the latest week.
U.S. producer prices recorded their biggest gain in a year in June as the cost of energy products and services increased, pointing to a steady build-up in inflation as the drag from a strong dollar and lower oil prices fades.The Labor Department said on Thursday its producer price index for final demand rose 0.5 percent last month, the largest increase since May 2015, after advancing 0.4 percent in May. In the 12 months through June, the PPI increased 0.3 per cent, rising for the first time since December 2014, after slipping 0.1 per cent in May. Economists polled by Reuters had forecast the PPI gaining 0.3 per cent last month and dipping 0.1 per cent from a year ago.
KEY STOCKS TO WATCH
JPMorgan, the biggest U.S. bank by assets, reported a quarterly profit that beat estimates by a large margin, kicking off big banks' earnings on a upbeat note. The company's shares rose 2.5 percent to $64.75 premarket.
Asset manager BlackRock Inc's quarterly profit fell 3.7 percent, hurt by lower fees as investors shifted from equities to cash deposits and fixed income investments amid global uncertainties. On an adjusted basis, the company earned $4.78 per share, in line with the average analyst estimate, according to Thomson Reuters I/B/E/S.
Delta Air Lines Inc.'s second-quarter profit beat analyst expectations as cheap fuel overcame foreign-currency weakness against the dollar and a nagging decline in fares. Adjusted earnings were $1.47 a share, topping the $1.42 average of 13 analyst estimates compiled by Bloomberg. Revenue was $10.4 billion, compared with the average estimate of $10.5 billion.
Procter & Gamble rose 1.3 per cent to $87.04 in the premarket after UBS upgraded the stock to "buy" from "neutral".
Yum! Brands Inc. advanced 3.1 per cent in the premarket after beating quarterly profit estimates and raising its forecast.
Japan's Line Corp is expected to debut on the New York Stock Exchange. The messaging app firm's IPO was priced at the top of its marketed range, putting it on course to raise up to $1.3 billion and reflecting demand from investors keen on a rare opportunity to invest in a highprofile tech startup.
Earnings include: Advanced Micro Devices Inc.; BlackRock Inc.; Celanese Corp.; Cintas Corp.; First Republic Bank; M&T Bank Corp.
Also see: Thursday's small-cap stocks to watch
With files from Bloomberg and other wire services