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.
The Dow, S&P 500 and Nasdaq all hit new highs Thursday, sending positive momentum into Asia Pacific trading overnight. The Nikkei gained 1.1 per cent on its return from a holiday while the Hang Seng rose 0.8 per cent and Shenzen in China jumped 3.1 per cent despite soft Chinese retail sales and industrial production. London's FTSE and Dax are flat following weak U.K. construction data and mixed European GDP reports.
U.S. and Canadian index futures are flat as well this morning, and have reversed earlier modest gains, as traders take in today's U.S. retail sales report, which was weaker than expected. Macy's soared 17 per cent Thursday while Nordstrom beat the Street by a wide margin after the close and could be in the spotlight today. Strength on the consumer side could add to the case for a more hawkish Fed. Thursday, San Francisco Fed President John Williams indicated he is still looking for one rate hike this year (my guess is December after the election).
Crude oil and related markets like the Canadian dollar, as well as energy stocks, are also in focus again today. West Texas intermediate has paused following a big pop Thursday on signs from Saudi Arabia that there could be side discussions about stabilizing the market between OPEC and non-OPEC producers at an energy conference next month in Algeria.
Today's Baker Hughes rig count may also influence trading. Much has been made lately about an uptick in active rigs from about 400 to 460, but traders should recognize activity usually bounces back in the summer as spring breakup ends, and road bans on heavy equipment movement are lifted. At this time a year ago, there were about 880 rigs active, so exploration activity remains really slow.
Here's a closer look at what's going on this morning:
MARKET DATA: (as of about 830 a.m. ET)
Futures
Dow -0.11 per cent; S&P 500 -0.07 per cent; Nasdaq: -0.02 per cent; TSX 60: -0.05 per cent
Equities
Japan's Nikkei +1.10 per cent
Shanghai composite index +1.61 per cent
Hong Kong's Hang Seng +0.83 per cent
Germany's DAX -0.18 per cent
London's FTSE -0.02 per cent
France's CAC 40 -0.08 per cent
Commodities
WTI crude oil (Nymex Sep) -0.11 per cent at $43.44 (U.S.) a barrel
Gold (Comex Dec) -0.42 per cent at $1,344.30 (U.S.) an ounce
Copper (Comex Sep) -1.62 per cent at $2.1555 (U.S.) a pound
Currencies
Canadian dollar +0.05 at 76.98 cents (U.S.)
U.S. dollar index -0.003 at 95.854
Bonds
Canada 10-year bond yield -0.009 at 1.022 per cent
KEY ECONOMIC RELEASES
Teranet said Canadian July home prices rose 10.9 per cent from a year earlier, or 2 per cent on a monthly basis from a 2.3 per cent rise in June.
U.S. July retail sales were unchanged from June vs. an estimated 0.4 per cent gain.
U.S. producer prices unexpectedly fell in July on declining costs for services and energy products, pointing to a tame inflation environment that could make it difficult for the Federal Reserve to raise interest rates. The Labor Department said on Friday its producer price index for final demand dropped 0.4 per cent last month, the first decline since March and the largest since September 2015. It increased 0.5 per cent in June. In the 12 months through July, the PPI slipped 0.2 per cent after rising 0.3 per cent in the 12 months through June. Economists polled by Reuters had forecast the PPI edging up 0.1 per cent last month and gaining 0.2 per cent from a year ago.
Still to come:
(10 a.m. ET) U.S. business inventories for June. Estimate is an increase of 0.1 per cent from May.
(10 a.m. ET) U.S. University of Michigan Consumer Sentiment for August (preliminary). Consensus is 91.5, up from 90.0 in July.
(1 p.m. ET) Baker-Hughes rig count.
KEY STOCKS TO WATCH
Concordia International Corp. reported adjusted earnings per share for the second quarter of $1.38, below expectations of $1.44. It also forecast revenues below expectations and suspended its dividend. The company also announced today that Adrian de Saldanha, Concordia's CFO, will be leaving the organization to pursue other opportunities. Mr. de Saldanha will be replaced by Concordia's current executive vice-president, Edward Borkowski. Shares are down 17 per cent in the U.S. premarket.
Aimia Inc. reported second-quarter revenue of $525.4-million, down from $536.9-million a year ago. Analysts were expecting revenue of $426.7-million in the most recent quarter. Net earnings were $7.2-million or 2 cents per share, down from $32.6-million or 17 cents a year earlier. The company also lowered its guidance.
Amaya Inc, owner of gambling websites PokerStars and Full Tilt, said Chief Executive David Baazov, who was charged with insider trading by Quebec's securities regulator, stepped down on Thursday. Amaya, which reported a higher-than-expected quarterly profit as it added more customers, said it was continuing to review its strategic options. The company said it was in talks with "a number of parties" and some of these talks have progressed.
J.C. Penney Co. on Friday reported a loss of $56 million in its fiscal second quarter. Losses, adjusted for one-time gains and costs, came to 5 cents per share. The results surpassed Wall Street expectations. The average estimate of 12 analysts surveyed by Zacks Investment Research was for a loss of 15 cents per share. The department store operator posted revenue of $2.92 billion in the period, which did not meet Street forecasts. Seven analysts surveyed by Zacks expected $2.93 billion.
Nvidia rose 4.7 percent to $62.50 in premarket trading after the chipmaker reported its fastest quarterly sales growth in nearly five years. The stock was the top percentage gainer among S&P companies.
Other earnings today include: Amaya Inc.; GDI Integrated Facility Services Inc.; GoGold Resources Inc.; Hydro One Ltd.; Leon's Furniture Ltd.; MAG Silver Corp.; Metro Inc.; Talon Metals Corp.; Timmins Gold Corp.
Also see: Friday's small-cap stocks to watch
With files from Bloomberg and other wire services