Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Monday, June 20, 2016.Bloomberg
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.
Positive earnings are setting the tone for equity markets this morning, with the TSX set to rise at the open and Wall Street poised to challenge record highs.
Technology companies and carmakers led the Stoxx Europe 600 Index higher after earnings from software maker SAP SE and Volkswagen AG beat analysts' estimates. The U.S. dollar advanced for a second day against the euro - sending the loonie lower - while Treasuries declined. The lira fluctuated near a record-low as the country's president vowed to make an "important" announcement in the wake of a failed coup attempt. Gold headed for the lowest close this month.
Corporate earnings are helping sustain a run that's added more than $4.5 trillion (U.S.) to the value of equities worldwide in three weeks. That along with better-than-estimated U.S. economic data is providing comfort to investors even as concern mounts that the U.K.'s vote to leave the European Union will damp global growth. Microsoft Corp. and Morgan Stanley were among the latest U.S. companies to report earnings that surpassed forecasts. Canadian Pacific Railway also reported results this morning that beat Street expectations.
"Microsoft has for a long time has been one of the bellwether stocks for the U.S.," said Frances Hudson, an Edinburgh-based global thematic strategist at Standard Life Investments. "I am seeing more greens than reds in terms of earnings beats, which seems relatively positive.
The Stoxx 600 added 0.7 percent at 7:15 a.m. in New York, with the volume of shares changing hands 38 percent lower than the 30-day average. S&P 500 Index futures rose 0.3 percent after the measure slipped on Tuesday from an all-time high. Futures for the TSX 60 are up by a similar percentage.
Europe's benchmark gauge has alternated between gains and losses each day since last week, after a rebound of about 9 per cent following the slump after the Brexit vote on June 23. Investors watching corporate earnings results are also waiting for Thursday's ECB meeting for clues about President Mario Draghi's plans. Economists in a Bloomberg survey predict rates will remain unchanged this week.
In overseas trading, Anglo American Plc dragged miners lower, falling 6.5 percent, after cutting its copper production target. Man Group Plc lost 4.3 percent as its Chief Executive Officer Emmanuel Roman was tapped to be CEO at Pacific Investment Management Co.
In the U.S., Microsoft climbed 4 per cent in early New York trading and Morgan Stanley gained 2.9 per cent. The earnings seasons so far has delivered more positive surprises than negative ones. Analysts see profit at S&P 500 companies falling 5.8 percent in the second quarter, which would mark a fifth consecutive slide, the longest streak since 2009.
The lira slipped 0.1 percent stronger at 3.0463 per dollar, after earlier sinking as much as 0.7 percent to 3.0623, within 0.5 percent of the all-time low reached in September. The currency is down 4.9 percent, the worst performance among major currencies, since a failed coup attempt on Friday as authorities purged state institutions, the central bank lowered interest rates and and Moody's Investors Service said it may lower the country's credit rating to junk. President Recep Tayyip Erdogan is due to make an announcement on Wednesday that an official said would boost social cohesion and Turkey's democratic credentials.
The Bloomberg Dollar Spot Index climbed as much as 0.2 percent to its strongest level since June 1, before being little changed. It advanced 0.5 percent on Tuesday as a report showed new-home construction in the U.S. rose more than economists forecast in June. A Citigroup gauge that tracks the degree to which American data are exceeding projections is at an 18-month high and futures put the chance of a Federal Reserve rate increase this year at 43 per cent, up from 9 per cent at the end of June.
"The market will recalibrate on Fed rate-hike expectations to price in at least one" this year, said Charlie Lay, a foreign-exchange strategist in Singapore at Commerzbank AG. "That should support the dollar."
Sterling climbed 0.4 percent to $1.3158 as the U.K. jobless rate, as measured by International Labour Organisation standards, dropped to 4.9 percent in the three months through May. The median forecast in a Bloomberg survey of economists was for an unchanged reading of 5 percent.
Oil held near $45 a barrel as U.S. industry data showed a drop in crude stockpiles, paring a surplus in the world's largest fuel consumer. Futures were little changed in New York after dropping 1.3 percent Tuesday to a two-month low.
Copper retreated 0.5 percent to $4,960 a ton in London after Chinese data showed output rising in the world's biggest producer and user of refined metal, underscoring concerns that supply continues to outpace demand. Nickel dropped as much as 2.1 percent, retreating from its highest close since October.
Gold dropped 0.4 percent, heading for the lowest close this month at $1,326.10 an ounce as European equities rose on earnings, limiting demand for a haven and as rising expectations of a U.S. interest rate increase reduced the appeal of non-yielding assets.
Treasuries declined, with the 10-year yield rising two basis points to 1.58 percent. The yield has risen from an all-time low of 1.318 percent, set earlier this month, as data showed signs of resilience and boosted higher-yielding assets.
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 +0.36 per cent; S&P 500 +0.31 per cent; Nasdaq: +0.33 per cent; TSX 60: +0.36 per cent
Equities
Japan's Nikkei -0.25 per cent
Shanghai composite index -0.27 per cent
Hong Kong's Hang Seng +0.97 per cent
Germany's DAX +1.42 per cent
London's FTSE +0.32 per cent
France's CAC 40 +1.12 per cent
Commodities
WTI crude oil (Nymex Aug) -0.07 per cent at $44.62 (U.S.) a barrel
Gold (Comex Aug) -0.67 per cent at $1,323.40 (U.S.) an ounce
Copper (Comex July) -1.26 per cent at $2.234 (U.S.) a pound
Currencies
Canadian dollar -0.18 at 76.57 cents (U.S.)
U.S. dollar index +0.019 at 97.082
Bonds
Canada 10-year bond yield +0.023 at 1.098 per cent
KEY ECONOMIC RELEASES
No major reports due
KEY STOCKS TO WATCH
Canadian Pacific Railway reported Q2 EPS of $2.15 a share vs. expectations of $2.01. On an adjusted basis, EPS was $2.05 vs estimates of $2.01. Revenue was inline with expectations. The company also said Keith Creel will become president and CEO as of July 1, 2017. It signed a three-year consulting agreement with Hunter Harrison.
Wall Street investment bank Morgan Stanley reported a lower, but better-than-expected, adjusted second-quarter profit on Wednesday, helped by a decline in expenses. The bank said its net income attributable to common shareholders was $1.43 billion (U.S.), or 75 cents per share, in the quarter ended June 30. Analysts on average had expected earnings of 59 cents per share in the latest quarter, according to Thomson Reuters I/B/E/S.
Microsoft was up 4.3 per cent at $55.39 after its quarterly results handily beat expectations late Tuesday.
Halliburton Co, the world's No.2 oilfield services provider, reported a smaller-than-expected quarterly loss and said it expects to see a "modest uptick" in North American rig count in the second half of the year.
Other earnings today include: Abbott Laboratories; American Express Co; Canadian Pacific Railway Ltd.;eBay Inc.; F5 Networks; Graco Inc; IMAX Corp.; Intel Corp.; Las Vegas Sands Corp.; LaSalle Hotel Properties; Mattel Inc.; Monarch Casino & Resort Inc; Newmont Mining Corp; Pacific Continental Corp; Pacific Continental Corp; Qualcomm Inc; Raymond James Financial Inc.; Select Comfort Corp.; St. Jude Medical Inc.; Tractor Supply Co.; Tupperware Brands Corp.; United Rentals Inc.
Canada's Brookfield Asset Management Inc plans to invest about $1 billion in Indian distressed assets through a joint venture with the largest lender in the South Asian nation where banks are battling a record $120 billion of sour debt. Brookfield and State Bank of India have signed a preliminary agreement to set up a joint venture for the investments, the firms said on Wednesday.
With files from Bloomberg and other wire services