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.
It's been a mixed evening and morning for traders. U.S. indexes have stabilized at lower levels following Monday's takedown but European indexes have rebounded on the back of surging euro zone inflation and falling unemployment. U.S. index futures are down 0.1 per cent while the Dax is up 0.1 per cent and the FTSE is up 0.6 per cent.
Currency markets have been steady overnight with the U.S. dollar gaining a bit of ground on most majors. The Canadian dollar is steady ahead of Canadian GDP and producer price reports due today. Commodities are also mixed with copper up 1.5 per cent and WTI crude oil down 0.2 per cent. The Bank of Japan stayed the course and raised its GDP forecast.
Gold is slightly outperforming other currencies today but remains stuck just above $1,200 (U.S.). These gains reflect continuing activity and uncertainty in the political arena. U.S. President Donald Trump remains focused on immigration at the moment with the ban he's implemented and is expected to announce his Supreme Court nominee tonight. On top of the potential that trade talks could cause economic disruption and the recent events remind the Street that business is not the President's only priority.
Sterling could be active today with the government expected to table a brief bill enabling it to start Brexit negotiations. Press reports suggest the target date for triggering Article 50 could be moved up to March 9.
The Fed starts a two-day meeting today with the decision due tomorrow. No change is expected but the statement could attract keen interest from traders looking for hints of whether a March increase is still on the table. For the Fed to raise rates in and orderly fashion, it would need to hike in March if it intends to reach four increases in 2017. To pass on March would mean a more dovish Fed than the Street is currently expecting.
There's a lot of data for the Fed and the market to consider before the decision including Chicago PMI later this morning, plus manufacturing PMI and ADP payrolls tomorrow morning. Earnings season picks up again today too with Apple reporting after the close this afternoon.
Now, here is a closer look at key market data, and corporate and economic news.
MARKET DATA:
Futures (as of about 7:30 a.m. ET)
Dow -0.18 per cent; S&P 500 -0.21 per cent; Nasdaq: -0.22 per cent; TSX 60 -0.30 per cent
Equities
Japan's Nikkei -1.69 per cent
Shanghai composite index Closed
Hong Kong's Hang Seng Closed
Germany's DAX +0.09 per cent
London's FTSE +0.53 per cent
France's CAC 40 +0.24 per cent
Commodities
WTI crude oil (Nymex March) -0.17 per cent at $52.54 (U.S.) a barrel
Gold (Comex April) +1.05 per cent at $1,208.60 (U.S.) an ounce
Copper (Comex March) +1.5 per cent at $2.70 (U.S.) a pound
Currencies
Canadian dollar +0.26 at 76.46 cents (U.S.)
U.S. dollar index +0.01 at 101.19
Bonds
Canada 10-year bond yield +0.01 at 1.76 per cent
KEY ECONOMIC RELEASES
Japan jobless rate, household spending and industrial production
Bank of Japan decision and outlook report
Euro Area real GDP, CPI and jobless rate
Germany unemployment and retail sales
U.K. consumer confidence and parliament to debate Brexit process
China markets closed
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(8:30 a.m. ET) Canada real GDP at basic prices for November. Consensus projection is a 0.3-per-cent increase from October.
The Canadian economy grew 0.4 per cent in November from October, slightly more than expected, pushed up in part by a rebound in manufacturing, Statistics Canada data indicated on Tuesday. The increase, the fifth in the past six months, was greater than the 0.3-per-cent advance forecast by analysts in a Reuters poll. Statscan revised its October data to show a contraction of 0.2 per cent, less than the previously reported 0.3-per-cent drop. Manufacturing grew 1.4 per cent after a 1.7-per-cent drop in October, pushed up by higher output of petroleum and coal products, food, machinery, computer and electronic products.
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(8:30 a.m. ET) Canada industrial product price index and raw materials price index for December. Estimate is increases of 0.7 per cent and 6.0 per cent, respectively, from November.
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(8:30 a.m. ET) U.S. employment cost index for Q4. Consensus is an increase of 0.6 per cent from Q3 and 2.4 per cent year over year.
U.S. labor costs rose less than expected in the fourth quarter amid moderate gains in wages, a government report showed on Tuesday. The Employment Cost Index, the broadest measure of labour costs, increased 0.5 percent after rising 0.6 percent in the third quarter, the Labor Department said. That slowed the year-on-year rate of increase to 2.2 percent from 2.3 percent in the third quarter. Economists polled by Reuters had forecast the ECI rising 0.6 percent in the fourth quarter.
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(8:55 a.m. ET) U.S. Redbook
(9 a.m. ET) U.S. Case-Shiller Home Price Index (20 City) for November. Consensus is an increase of 0.6 per cent from October and 5.0 per cent year over year.
(9:45 a.m. ET) U.S. Chicago PMI for January. Consensus is 55.0, up from 53.9 in December.
(10 a.m. ET) U.S. Conference Board Consumer Confidence Index for January. Consensus projection is 112.5, down from 113.7 in December.
(5:20 p.m. ET) Bank of Canada governor Stephen Poloz speaks at the University of Alberta Business School in Edmonton with a press conference to follow at 6:40.
Also: U.S. Federal Open Market Committee meeting begins
KEY STOCKS TO WATCH
Also see: Tuesday's small-cap stocks to watch
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Under Armour dropped 21 per cent premarket after quarterly sales missed estimates and the sportswear maker said its chief financial officer would leave. Bigger rival Nike Inc was down 2.6 per cent.
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Mylan was up 3.5 per cent at $37.60 (U.S.) after a U.S. court rejected Teva's claims of patent infringement on its multiple-sclerosis drug. Mylan is trying to market a generic version of the drug.
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Dow component Pfizer slipped 1.3 per cent to $30.91 after the drugmaker reported a decline in fourth quarter revenue.
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United Parcel Service Inc. is reporting a fourth-quarter loss of $239 million, after reporting a profit in the same period a year earlier. Adjusted earnings were $1.63 per share, which missed Wall Street expectations of $1.68 per share. Its shares fell 3.8 per cent in premarket trading.
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Exxon Mobil Corp. reported fourth-quarter profit of $1.68 billion and adjusted earnings of 90 cents per share. The results exceeded Wall Street expectations. Its shares fell 0.13 per cent in premarket trading.
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MasterCard Inc. reported fourth-quarter net income of $933 million and a per share profit of 86 cents, which beat estimates by a penny. Its shares fell 2.8 per cent in premarket trading.
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Imperial Oil Ltd.'s profit shot up in the fourth quarter, helped by a $988-million (Canadian) gain from the sale of its retail sites. Net income rose to $1.44-billion or $1.70 per share, up from $102 million, or 12 cents per share, a year earlier. Revenue rose 35.5 per cent to $8.44-billion. Its shares in New York were up 0.03 per cent in premarket trading.
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Coach Inc. posted a 17.4 per cent rise in quarterly profit as the company cut back on discounts in the United States while selling more handbags in China and Japan. Its shares were up 1.03 per cent in premarket trading.
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Aetna beat fourth-quarter earnings expectations despite pressure from coverage it sells on the Affordable Care Act's exchanges, but the health insurer's 2017 forecast started well below Wall Street projections. The insurer said that it expects adjusted earnings of at least $8.55 for the new year. Analysts forecast, on average, earnings of $8.78 per share, according to FactSet. Its shares were up 1.53 per cent in premarket trading.
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Sprint Corp. posted a smaller quarterly loss as the No. 4 U.S. wireless carrier cut costs as part of a turnaround plan. Its shares were down 0.66 per cent in premarket trading.
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Pfizer Inc., which closed its $14-billion acquisition of Medivation Inc. in September, reported a lower-than-expected profit, hit by lower demand for its flagship flu vaccine Prevnar and higher expenses. Global Prevnar sales fell 23 percent to $1.42-billion, below estimates of $1.62 billion, according to Evercore ISI. Its adjusted profit of 47 cents per share missed the average analysts' estimate of 50 cents, according to Thomson Reuters I/B/E/S. Its shares were down 1 per cent in premarket trading.
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Earnings include: Allstate Corp.; Altria Group Inc.; Anthem Inc.; Apple Inc., ATS Automation Tooling Systems Inc.; Baxter International Inc.; Cabot Corp.; Calian Group Ltd.; Celanese Corp.; Dominion Resources Inc.; Edwards Lifesciences Corp.; Exco Technologies Ltd.; Facebook Inc.; Fidelity National Financial Inc.; Ingersoll-Rand PLC; Johnson Controls International PLC; Marathon Petroleum Corp.; Metlife Inc.; Owens-Illinois Inc.; Pitney Bowes Inc.; PPL Corp.; Siemens AG; Symantec Corp.
With files from wire services