A trader works on the floor of the New York Stock Exchange (NYSE) in New York, U.S., June 24, 2016.
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 will return.
Global markets are pressing the pause button.
After the S&P 500 Index Monday set its fifth all-time high in six days, futures signaled on Tuesday that stocks will retreat in both Canada and the U.S. at the opening bell.
The Stoxx Europe 600 Index had its biggest drop in two weeks as Akzo Nobel NV and Rio Tinto Group posted results that missed estimates. U.S. Treasuries and gold rose as investors sought havens, while the Australian and New Zealand dollars weakened after the countries' central banks signaled they are moving toward interest-rate cuts.
Investors are taking stock after adding $4.6 trillion to the value of equities worldwide in the past three weeks as some earnings have raised the specter the gains may have come too far, too fast. The International Monetary Fund is due to update its projections for world growth on Tuesday after Managing Director Christine Lagarde warned last week estimates may be cut.
"If the U.S. market is at an all-time high and you have a day of waiting for news, investors trim exposure," said Ben Kumar, investment manager at Seven Investment Management LLP, which oversees 10 billion pounds ($13 billion).
The Stoxx 600 slid 0.9 percent at 7:12 a.m. in New York. Commodity producers fell the most among 19 industry groups, as Rio Tinto dropped 3.7 percent after its second-quarter iron ore production rose less than expected. BHP Billiton Ltd. and Glencore Plc also fell more than 3 percent.
Akzo Nobel slid 5.1 percent after saying a slowdown in sales in the U.K. in the run up to the nation's referendum has yet to recover. Fiat Chrysler Automobiles NV fell 4.2 percent after saying it is under investigation by U.S. authorities over how it reports sales.
S&P 500 futures expiring in September declined 0.3 percent. Netflix sank 12 percent in early New York trading. UnitedHealth Group Inc. added 2.3 percent after the largest U.S. health insurer reported quarterly profit that beat analyst estimates. Johnson & Johnson climbed 3 percent after posting higher earnings than projected and raising its annual sales forecast.
Futures for the S&P 60 are down about 0.1 per cent.
The MSCI Emerging Markets Index fell 0.2 percent after rising 6.2 percent in the previous eight sessions and sending valuations to the highest since May 2015.
The pound fell 0.6 percent to $1.3174, after briefly paring declines following a report showing the U.K.'s annual inflation rate rose more than economists forecast in June.
Turkey's lira weakened 0.1 percent as the central bank cut rates after the first policy meeting since last week's failed coup. It lowered the overnight lending rate by a quarter of a percentage point, in line with estimates. Moody's Investors Service put Turkey on review for a potential downgrade on Monday to "assess the medium-term impact" on growth and policy making institutions.
Crude oil retreated 0.1 percent to $45.18 a barrel in New York amid speculation U.S. production may continue gains as drillers put rigs back to work. Companies added drill rigs for the sixth time in seven weeks through July 15, according to figures Friday from Baker Hughes Inc.
Gold pushed higher with havens such as the yen as European equities declined after earnings missed analyst expectations, raising hopes of further loosening. Bullion for immediate delivery traded up 0.3 percent at $1,333.15 an ounce, according to Bloomberg generic pricing.
Zinc extended its advance to the highest level in more than a year on concerns over a looming supply deficit. The metal used to galvanize steel rose as much as 1.3 percent to $2,247.50 a metric ton on the London Metal Exchange, the highest since May last year.
U.S. Treasuries due in a decade gained for the first time in four days, pushing their yield down by four basis points to 1.55 percent. The yield reached 1.60 percent in the last session, the highest it's been since June 24, when the Brexit vote count was announced. Similar-maturity bonds in Australia also advanced, cutting their yield by seven basis points to 1.92 percent. New Zealand's yield fell seven basis points to 2.26 percent.
The cost of insuring corporate debt against default rose for the fourth time in five days. The Markit iTraxx Europe index of credit-default swaps on investment-grade companies rose one basis point to 73 basis points. An index of swaps on junk-rated companies climbed six basis points to 332 basis points.
Here is a closer look at morning markets and key corporate and economic news.
MARKET DATA: (as of about 7 a.m. ET)
Futures
Dow -0.05 per cent; S&P 500 -0.24 per cent; Nasdaq: -0.24 per cent; TSX 60: -0.14 per cent
Equities
Japan's Nikkei +1.37 per cent
Shanghai composite index -0.24 per cent
Hong Kong's Hang Seng -0.60 per cent
Germany's DAX -1.18 per cent
London's FTSE -0.31 per cent
France's CAC 40 -1.02 per cent
Commodities
WTI crude oil (Nymex Aug) -0.27 per cent at $45.14 (U.S.) a barrel
Gold (Comex Aug) +0.20 per cent at $1,332.00 (U.S.) an ounce
Copper (Comex July) +0.45 per cent at $2.247 (U.S.) a pound
Currencies
Canadian dollar -0.34 at 76.78 cents (U.S.)
U.S. dollar index +0.22 at 96.77
Bonds
Canada 10-year bond yield -0.029 at 1.073 per cent
KEY ECONOMIC RELEASES
U.S. June housing starts rose 4.8 per cent month over month vs. an estimated 0.2 per cent gain. Building permits rose 1.5 per cent month over month vs. an estimated 1.2 per cent gain.
KEY STOCKS TO WATCH
Netflix Inc said it added fewer video streaming subscribers than expected from April through June as some customers canceled the service ahead of a price increase, and the company's shares fell 16 per cent in the premarket.
Goldman Sachs Group Inc., the Wall Street bank most reliant on trading, posted a 74 percent increase in second-quarter profit as legal costs fell and fixed-income revenue surpassed analysts' estimates. Net income rose to $1.82 billion, or $3.72 a share, from $1.05 billion, or $1.98, a year earlier, when the company had a $1.45 billion provision for legal and other regulatory matters, New York-based Goldman Sachs said Tuesday in a statement. Eighteen analysts surveyed by Bloomberg estimated per-share earnings of $3.05. Shares in the bank are up 0.4 per cent in the premarket.
Philip Morris International Inc. on Tuesday reported second-quarter net income of $1.79 billion. The New York-based company said it had net income of $1.15 per share. The results missed Wall Street expectations. The average estimate of seven analysts surveyed by Zacks Investment Research was for earnings of $1.21 per share.
Johnson & Johnson on Tuesday reported second-quarter net income of $4 billion. The company said it had profit of $1.43 per share. Earnings, adjusted for non-recurring costs and amortization costs, came to $1.74 per share. The results surpassed Wall Street expectations. The average estimate of 11 analysts surveyed by Zacks Investment Research was for earnings of $1.67 per share. The world's biggest maker of health care products posted revenue of $18.48 billion in the period, also topping Street forecasts. Five analysts surveyed by Zacks expected $17.89 billion. The company also raised its guidance. Shares are up 3 per cent in the premarket.
UnitedHealth Group Inc, the largest U.S. health insurer, reported a better-than-expected quarterly profit due to strength its pharmacy benefit management business, and technology and consulting divisions. The company's shares rose about 2.3 per cent in light premarket trading on Tuesday. UnitedHealth also narrowed its adjusted full-year profit outlook to $7.80-$7.95 per share, from a prior range of $7.75-$7.95 per share.
Lockheed Martin Corp, Pentagon's No. 1 weapons supplier, reported better-than-expected quarterly revenue, as the company benefited from the acquisition of helicopter maker Sikorsky Aircraft and increased sales of its F-35 fighter jet. Shares of the company, which raised its full-year revenue and profit forecasts, rose 1.45 percent to $260.0 in premarket trading on Tuesday. They had gained about 18 percent this year through Monday's close. Lockheed raised its 2016 profit forecast for the second time this year and said it now expected to earn $12.15–$12.45 per share, from $11.50-$11.80 previously estimated. The company also raised it 2016 sales forecast to $50.0 billion-$51.5 billion, from $49.6 billion-$51.1 billion. Analysts on average were expecting a profit of $11.84 per share and revenue of $50.46 billion, according to Thomson Reuters I/B/E/S.
Other earnings today include Cintas Corp; Discover Financial Services; Goldman Sachs; Lockheed Martin; Microsoft Corp; TD Ameritrade; United Continental Holdings Inc.
U.S. seed company Monsanto Co said a sweetened $125-per-share offer from German chemicals group Bayer AG was "financially inadequate and insufficient to ensure deal certainty." Bayer increased its bid last Thursday, making the offer the largest all-cash bid on record, in an effort to entice Monsanto's management to give the German company full access to its books.
With files from Bloomberg and other wire services