Jennifer Dowty will return.
Cheers for the Federal Reserve are extending into this morning, with stock futures suggesting a higher open for North American markets. Fed Chair Janet Yellen did very much the expected Wednesday in hiking interest rates for the first time in nearly 10 years while emphasizing further moves will be modest and dependent on economic data. Markets are relieved the first hike is finally out of the way and that a cautious approach is in place when it comes to the tightening of monetary policy going forward.
Futures for the S&P 500 are up about 7 points and 4 points for the TSX 60. That suggests, at this point, that markets will open up in the 0.2-per-cent to 0.4-per-cent range. The battered energy sector may see modest moves to start the day after heavy losses on Wednesday when the U.S. released a surprise build in crude inventories. This morning, crude futures are just slightly positive.
European stocks are seeing a strong rally in the footsteps of the gains Wednesday on Wall Street. Major Asian markets were also all higher overnight, although gains were more modest in emerging markets, where there are concerns the stronger U.S. dollar - a consequence of higher interest rates - could damper growth rates in those regions.
While rate forecasts by Fed members - so-called dot points - suggest 100 basis points of rate hikes next year, markets are a bit more skeptical. Fed fund futures, an indication of where professional traders expect rates to go, imply a rate of only 0.83 per cent one year from now. That's below the 1.25-per-cent to 1.50-per-cent range that Fed members were suggesting in new forecasts released Wednesday. Meanwhile, moves in U.S. Treasuries have been relatively mild in the wake of Wednesday's Fed decision.
The main focus for traders now returns to economic data, which will provide significant clues on where monetary policy is heading. Today, the U.S. released weekly initial jobless claims and current account data - and both weren't far off economists' expectations.
Recent weakness in equity markets and strong historical seasonal trading patterns have many expecting a Santa Claus rally this year now that the Fed is out of the way. Traditionally, the Santa Claus rally has occurred between Dec. 15 and Jan. 6. Since 1950, the S&P 500 Index has gained an average of 2.13 per cent per period and was profitable 80 per cent of the time. The TSX Composite gained an average of 2.99 per cent per period and was profitable 84 per cent of the time. While the resource sector of the TSX has little going for it right now, with inflating stockpiles on the supply side and weak Chinese demand on the other side of the equation, higher-risk investors may be tempted to start hunting for bargains in this seasonally strong period.
More on markets today:
Thursday's small-cap stocks to watch
Thursday's analyst upgrades and downgrades
Global stocks jump on turbulence-free Fed liftoff
Fed rate hike poses no immediate risk to bull market
Oil edges up, but oversupply, strong dollar keep pressure on
And here's a closer look at this morning's market moves, as well as corporate and economic news.
MARKET DATA
Futures
S&P 500 +0.4 per cent; Dow +0.4 per cent; Nasdaq: +0.5 per cent
Equities
Hong Kong's Hang Seng +0.79 per cent
Shanghai composite index +1.81 per cent
Japan's Nikkei +1.60 per cent
London's FTSE +1.56 per cent
Germany's DAX +3.32 per cent
France's CAC 40 +2.49 per cent
Commodities
WTI crude oil (Nymex Jan) +0.11 per cent at $35.56 (U.S.) a barrel
Gold (Comex Feb) -0.98 per cent at $1,066.20 (U.S.) an ounce
Copper (Comex Mar) -1.18 per cent at $2.05 (U.S.) a pound
Currencies
Canadian dollar -0.0026 at 72.30 cents (U.S.).
U.S. dollar index +1.016 at 98.887
Bonds
U.S. 10-year Treasury yield 2.26 per cent, -0.04
ECONOMIC NEWS
The number of Americans filing for unemployment benefits last week fell from a five-month high, suggesting sustained labor market healing that could lead to further Federal Reserve interest rate hikes next year. Initial claims for state unemployment benefits dropped 11,000 to a seasonally adjusted 271,000 for the week ended Dec.12, the Labor Department said on Thursday. The prior week's claims were unrevised. The figures were in line with market expectations.
The U.S. current account deficit in the third quarter widened sharply to its highest level in nearly seven years as a strong dollar weighed on exports and the profits of multinational corporations. The Commerce Department said on Thursday the current account deficit, which measures the flow of goods, services and investments into and out of the country, increased 11.7 percent to $124.1 billion, the largest shortfall since the fourth quarter of 2008. The second-quarter deficit was revised up to $111.1 billion from $109.7 billion. Economists polled by Reuters had forecast the deficit rising to $118.0 billion. The third-quarter current account deficit represented 2.7 percent of gross domestic product, the biggest percentage since the second quarter of 2012. That was up from 2.5 percent in the second quarter.
CORPORATE NEWS
Martin Shkreli, a lightning rod for growing outrage over soaring prescription drug prices, was arrested by the FBI on Thursday after a federal investigation involving his former hedge fund and a pharmaceutical company he previously headed. The securities fraud probe of Shkreli, who is now chief executive officer of Turing Pharmaceuticals and KaloBios Pharmaceuticals Inc, stems from his time as manager of hedge fund MSMB Capital Management and CEO of biopharmaceutical company Retrophin Inc, wire services are reporting.
Shaw Communications Inc. is finally poised to enter the wireless business, with a $1.6-billion deal to buy Toronto startup carrier Wind Mobile Corp. Calgary-based cable operator Shaw announced the transaction on Wednesday evening, noting that while the deal still requires approval from the federal government and the Competition Bureau, it expects it to close during the third quarter of fiscal 2016 (the first half of the calendar year).
Pandora shares were up 19 per cent in the premarket after the media-streaming company said new music royalty rates were "balanced."
Fedex shares were up 6.2 percent at $158 after it reported a better-than-expected quarterly profit.
Earnings include: Accenture PLC; Carnival PLC; General Mills Inc.; Red Hat Inc.
Darcy Keith