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Jennifer Dowty

Jennifer Dowty, Chartered Financial Analyst, writes exclusively for Globe Unlimited subscribers. The Before the Bell report is updated throughout the premarket to reflect latest developments.

The S&P/TSX composite ended its seven day losing streak on Tuesday, but just barely, inching higher by half a per cent.  This morning, North American futures are positive, setting the stage for markets to open higher.

Markets will also be waiting to hear from the U.S. Federal Open Market Committee as it ends its two-day meeting with a policy announcement.

It is a busy day today on the earnings front with 16 companies that have confirmed they will be reporting today. Four companies have already reported. According to Bloomberg, Calfrac Well Services reported results a few cents ahead of expectations, while Intact Financial and Thomson Reuters both missed expectations, and CGI Group reported financial results a penny shy of expectations. TransAlta reported and missed expectations this morning according to Bloomberg. In the company's press release the CEO, Dawn Farrell, said, "The second quarter performance of Canadian Coal and Energy Marketing was below our expectations." The stock price is down 12 per cent month-to-date.

The remaining 11 companies reporting after the close.  Here is a list of the companies reporting after the bell: Agnico Eagle Mines, Home Capital, Methanex, First Quantum, Lundin Mining, Open Text, HudBay Minerals, Constellation Software, Detour Gold, Avigilon, and Suncor Energy.

Now, here is the second quarter earnings scorecard. According to Bloomberg, since July 20, 50 per cent of companies have reported better-than-expected sales, while 63 per cent have reported better-than-expected earnings. In terms of growth, growth is absent in sales and earnings, with both figures negative at -4.6 per cent and -16.7 per cent, respectively.

Today, energy stocks could see some action. This morning, crude oil is down slightly, still holding the $47 to $48 (U.S.) range. Today, the Energy Information Administration (EIA) will release its weekly oil inventory report with another build expected. On Tuesday, the American Petroleum Institute reported that crude supplies declined by 1.9 million barrels, a larger than expected decline. However, reports that members of the Organization of the Petroleum Exporting Countries produced 3 million barrels of oil per day -- exceeding demand -- in the second quarter is putting some pressure on the price of oil this morning. Watch for the EIA data out at 10:30 a.m. EST as this could have an impact on the price of oil and energy stocks. This is a key report to watch for today.

Gold prices appear to be consolidating just under the $1,100 (U.S.) level for the time being.

Major European markets are slightly positive. German and French markets are relatively flat. The London market is up by about half a percent. The Athens Stock Exchange remains closed.

Overseas, Asian markets were relatively positive. In Japan, better-than-expected June retail sales were reported but down 0.8 per cent month-over-month, and down from the prior month's gain of 1.7 per cent. The Nikkei was relatively flat, closing down 0.1 per cent. Chinese markets have regained positive momentum after officials indicated that they would continue to take measures to support economic growth and stabilize equity markets. For now, investor confidence has been restored with the Shanghai Stock Exchange composite index gaining 3.4 per cent, the Shenzhen Stock Exchange composite index advancing an impressive 4.1 per cent as the market volatility persists.  In an economic release out of China, the July Consumer Sentiment Indicator increased to 114.5 from 112.3 in the prior month, despite the market volatility.

The Bottom Line:  Market stability has finally arrived with commodity prices stabilizing, and Chinese officials pledging they will take supportive measures. This stability may continue for the next few weeks as we march through this second quarter earnings season. The focus for investors has shifted to fundamentals with earnings reports.

The Federal Open Market Committee concludes its two day meeting today with a policy statement released at 2 p.m. I do not anticipate the Fed statement will give a clear indication as to whether or not a move will occur in September as there is still economic data points that the Fed will want to consider before the next FOMC meeting on Sept. 16 to 17.

Now, here is a look at major markets and news.

MARKET DATA:

Futures

S&P 500 +0.12 per cent; Dow +0.19 per cent; Nasdaq: +0.12 per cent

Equities
Hong Kong's Hang Seng +0.47 per cent
Shanghai composite index +3.44 per cent
Japan's Nikkei -0.13 per cent
London's FTSE 100 +0.70 per cent
Germany's DAX +0.03 per cent
France's CAC 40 +0.09 per cent
Stoxx 600 +0.51 per cent

Commodities
WTI crude oil (Nymex Sep) +0.73 per cent at $47.62 (U.S.) a barrel
Gold (Comex Dec.) -0.07 per cent at $1,095.90 (U.S.) an ounce
Copper (Comex Sep) +0.31 per cent at $2.41 (U.S.) a pound

Currencies
Canadian dollar at 77.19 (U.S.), -0.19
U.S. dollar index -0.01 at 96.77

Bonds
U.S. 10-year Treasury yield 2.25 per cent, +0.02

ECONOMIC INDICATORS:

Japan retail sales.

(10 a.m. ET) U.S. pending home sales for June. Consensus is an increase of 1 per cent from May.
(2 p.m. ET) U.S. Federal Open Market Committee announcement.

STOCKS TO WATCH:

German engineering group Siemens and Canada's Bombardier are in early talks to merge their rail businesses, The Wall Street Journal reported on Wednesday, citing people familiar with the matter. The paper said Bombardier was also in talks with other possible partners.Both Siemens and Bombardier declined to comment on the report.

Thomson Reuters Corp. on Wednesday reported a higher-than-expected quarterly profit even as currency weighed on its revenues The news and information company said second-quarter net earnings were $281-million, or 33 cents per share, compared with $260-million, or 31 cents per share, a year ago. Adjusted for special items, earnings were 52 cents per share. Analysts on average were looking for 50 cents per share, according to Thomson Reuters I/B/E/S.

Torstar Corp. has bought a 56 per cent stake in digital media company VerticalScope Holdings Inc. for $200-million. VerticalScope owns and operates more than 600 online forums as well as websites including AutoGuide.com, Motorcycle.com, ATV.com and PetGuide.com.

ANALYST ACTIONS:

BMO Capital analyst Daniel Salmon lowered his price target on Twitter Inc. (TWTR-N) to $34 (U.S.) from $42.

Waste Management Inc. (WM-N) was raised to "Buy" from "Hold" at Argus. The target price is $57 (U.S.) per share.

BMO Capital analyst Alex Arfaei reiterated an "Outperform" rating and boosted his price target on Pfizer (PFE-N) to $41 (U.S.) from $39 (U.S.) following the company's second-quarter results, saying the sum of the parts is looking better and said a split is becoming more likely.

Raymond James downgraded Potash Corp. (POT-N;POT-T) to"Market Perform".

Quote of the Day: "The bamboo that bends is stronger than the oak that resists."  Japanese Proverb

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