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.
Stock markets continue to steadily climb. The Nikkei stated a big 2.5-per-cent catch-up rally but other gains have been more moderate with the FTSE, DAX and U.S. index futures all up about 0.2 per cent. In currency trading, the U.S. dollar is flat or up slightly against gold and the other majors.
Overnight, Chinese imports and exports increased, boosting commodity process with the copper gaining 0.6 per cent and WTI crude oil gaining 1.3 per cent. Assurances from U.S. President Donald Trump to Chinese President Xi Jinping that the U.S. will maintain the One China policy have also been taken as a positive by traders. Chicago Fed President Charles Evans, a known dove at the Federal Open Market Committee, indicated three rate hikes this year would not be unreasonable, keeping up support for the greenback. We continued to see positive earnings out of the technology sector with Nvidia and Activision Blizzard beating the street.
There is still a lot of potential news on the way that could keep markets active right through to the weekend. Trade and infrastructure remain a big focus Friday with U.K. trade data and a summit meeting being held between U.S. President Trump and Japanese PM Shinzo Abe, with a press conference early afternoon.
Canada posted another huge increase in jobs last month. Once again the Street was way too pessimistic with expectations of a 10,000-job decline and I wasn't optimistic enough at 20,000 since Canada added 48,300 jobs last month. This pulled down the national unemployment rate to 6.8 per cent from 6.9 per cent. Full time jobs grew 15,000 less than last month's massive increase of 53,000 jobs, while part-time jobs rebounded by 32,000. TSX stock futures ticked higher after the report was released. The Canadian dollar is also rallying on the news which weakens the case for the Bank of Canada to cut interest rates. The loonie may remain active through Prime Minister Justin Trudeau's meeting with President Trump on Monday.
Now, here is a closer look at key market data, and corporate and economic news.
MARKET DATA:
Futures (as of about 8:40 a.m. ET)
Dow +0.15 per cent; S&P 500 +0.11 per cent; Nasdaq: +0.11 per cent; TSX 60 +0.16 per cent
Equities
Japan's Nikkei +2.5 per cent
Shanghai composite index +0.44 per cent
Hong Kong's Hang Seng +0.21 per cent
Germany's DAX +0.27 per cent
London's FTSE +0.30 per cent
France's CAC 40 -0.06 per cent
Commodities
WTI crude oil (Nymex March) +1.34 per cent at $53.71 (U.S.) a barrel
Gold (Comex April) -0.78 per cent at $1,227.10 (U.S.) an ounce
Copper (Comex March) +0.62 per cent at $2.67 (U.S.) a pound
Currencies
Canadian dollar +0.32 at 76.43 cents (U.S.)
U.S. dollar index +0.20 at 100.84
Bonds
Canada 10-year bond yield -0.12 at 1.69 per cent
KEY ECONOMIC RELEASES
Japan PPI and tertiary industry index
U.K. trade deficit, industrial production and manufacturing production
(8:30 a.m. ET) Canada employment for January. Consensus is a decline of 10,000, or 0.1 per cent, from December.
(8:30 a.m. ET) Canada unemployment rate for January. Consensus is 6.9 per cent, unchanged from December.
Statistics Canada says the economy added 48,300 net new jobs in January, pulling down the national unemployment rate to 6.8 per cent from 6.9 per cent. The service sector led the gain, particularly in the areas of finance, insurance, real estate, rental and leasing; business, building and other support services; transportation and warehousing; and public administration.
(8:30 a.m. ET) Canada average hourly wages for January. Estimate is an increase of 1.6 per cent year over year.
(8:30 a.m. ET) U.S. import prices for January. Consensus is an increase of 0.3 per cent from December and 3.5 per cent year over year.
(10 a.m. ET) University of Michigan Consumer Sentiment for February (P). Consensus is 97.6, down from 98.5 in January.
(2 p.m. ET) U.S. budget deficit for January. Estimate is $33.4-billion, down from $55.2-billion in January of 2016.
Also: U.S. PPI revisions
KEY STOCKS TO WATCH
Also see: Friday's small-cap stocks to watch
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Debt-heavy Pengrowth Energy Corp. is in talks to sell approximately $500-million in Alberta oil and gas assets to Infor Acquisition Corp., the latest sign of financial companies stepping up for energy assets, according to people familiar with the matter told The Globe and Mail.
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Fertilizer maker Agrium Inc. forecast a less profitable year than expected and said its quarterly profit plunged.
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Canada's Cameco Corp. reported a lower-than-expected quarterly profit, hurt by weak uranium prices. Its shares were down 0.09 per cent in premarket trading.
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Shares of Activision Blizzard rose 8.7 percent after the videogame maker reported better-than-expected quarterly revenue and a $1 billion share buyback program.
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Mead Johnson was up 5 percent after Reckitt Benckiser finalized a $16.6 billion deal to buy the infant formula maker.
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Skechers USA was up 11.2 percent in light trading after its fourth-quarter revenue beat expectations.
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Struggling retailer Sears Holdings Corp. reported a 10.3 percent drop in comparable store sales for the holiday quarter, and said it would cut debt and pension obligations by at least $1.5 billion this year.
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Insurance broker Aon PLC said on Friday it agreed to sell its benefits administration and HR BPO platform to private equity firm Blackstone Group LP for $4.3 billion in cash.
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News Corp., the owner of Dow Jones Newswires and book publisher HarperCollins, posted an adjusted profit that edged past analysts' estimates for the first time in three quarters as the drop in ad sales in its news business was offset by growth in its other businesses. The company reported a second-quarter adjusted EPS of 19 cents, one penny higher than the 18 cents analysts expected. Revenue in the business fell nearly 7 percent to $1.30 billion in the second quarter, missing analysts' average estimate of $1.34 billion, according to FactSet Street Account. Advertising revenue fell 8.3 percent to $748 million.
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Online travel services company Expedia Inc. reported a better-than-expected increase in fourth-quarter revenue, helped by higher gross bookings. However, the company's adjusted profit fell short of Wall Street estimates, due to higher expenses in the quarter. The company's total revenue rose 23.2 percent to $2.09 billion, beating analysts' average estimate of $2.07 billion, according to Thomson Reuters I/B/E/S. Its shares rose 1 per cent in premarket trading.
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In analyst actions:
Intel was downgraded to "hold" from "buy" at Canaccord Genuity. The firm said that while it is impressed with the results delivered by Intel in 2016, it feels the company is caught in the difficult position of deciding between investing in competitive new markets or protecting its more traditional businesses. Its shares fell 0.45 per cent in premarket trading.
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CIBC raised its price target on Manulife Financial Corp. $27 from $23.
CIBC raised its price target on Precision Drilling Corp. to $11 from $10.50.
Barclays raises target price on Telus Corp. to $50 from $48.
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Earnings include: AON PLC; ArcelorMittal SA; BSM Technologies Inc.; Emera Inc.; FirstService Corp.; Hydro One Ltd.; IGM Financial Inc..
With files from wire services