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.
Good Thursday morning to you. Global equity markets continue to forge higher after having one of worst quarters in years.
While futures are indicating a positive opening for the day, they are off higher levels earlier this morning. Dow futures are higher by 31 points, S&P 500 futures are up 3 points, and Nasdaq futures are rallying by 11 points. Here is Canada, the S&P/TSX 60 Index futures are up a 3 points.
Overseas in the Pacific Rim, Chinese markets are closed; however, we did have Chinese September Purchasing Managers' Index (PMI) Manufacturing data released, which came in at 49.8, relatively in-line with expectations of 49.7. In Japan, the Nikkei 225 advanced 2.3 per cent on speculation that the Bank of Japan may have to take further actions to support economic growth. The Bank of Japan's Tankan Manufacturing Index fell in the third-quarter. In Australia, the S&P/ASX 200 rose 1.8 per cent.
Turning to major European markets, while trading activity is positive, markets are well off from earlier highs in today's trading session. The U.K. FTSE is higher by 0.9 per cent. In France, the CAC is up by 0.6 per cent, and the German DAX is down by 0.4 per cent.
Euro zone Manufacturing PMI data for September was in-line with expectations at 52. German September Manufacturing PMI was just shy of expectations coming in at 52.3 versus expectations of 52.5. In France, the September Manufacturing PMI was slightly higher than expectations coming in at 50.6 compared to forecasts of 50.4. Shares of Glencore have staged a spectacular comeback. On Monday, the shares plunged 29 per cent, from 97.22 pounds to close at 68.62 pounds. Now, the shares are back up to nearly 94 pounds.
On Wednesday, investors stepped back into equity markets, taking advantage of oversold conditions for many stocks, and accumulating positions ahead of the upcoming third-quarter reporting season and a historically strong quarter for stocks. The S&P/TSX composite index gained 270 points, or 2.1 per cent, on high volumes. It was a broad-based rally with nine of the ten sectors closing higher. Health-care stocks led the gains with Concordia Healthcare and Valeant Pharmaceuticals up 18 per cent and 12 per cent, respectively.
On the commodities front, the price of gold is off slightly to $1,113 (U.S.), and the price of West Texas Intermediate oil futures are back above $46 (U.S.), just about where we started the month off in September. While there has been intra-day volatility with the price of oil, it remains in the $42 to $47 level and has been trading in the middle of this range. Natural Gas futures continue to slide lower and are currently just above the $2.50 (U.S.) level.
Here's the bottom line. The key report to watch for is Friday's U.S non-farm payroll data. If better-than-expected, it will tilt the odds in favour of a rate hike by the U.S. Federal Reserve sometime this year.
Now, here is a closer look at major markets, and corporate and economic news.
MARKET DATA:
Futures
S&P 500 +0.2 per cent; Dow +0.1 per cent; Nasdaq: +0.2 per cent
Equities
Hong Kong's Hang Seng Closed for a holiday
Shanghai composite index Closed for a holiday
Japan's Nikkei +1.92 per cent
London's FTSE 100 +1.26 per cent
Germany's DAX -0.38 per cent
France's CAC 40 +0.96 per cent
Stoxx 600 +0.93 per cent
Commodities
WTI crude oil (Nymex Nov) +2.44 per cent at $46.19 (U.S.) a barrel
Gold (Comex Dec) -0.25 per cent at $1,112.40 (U.S.) an ounce
Copper (Comex Dec) +0.45 per cent at $2.35 (U.S.) a pound
Currencies
Canadian dollar +0.0030 at 75.34 cents (U.S.).
U.S. dollar index +0.039 at 96.38
Bonds
U.S. 10-year Treasury yield 2.05 per cent, +0.008
ECONOMIC INDICATORS:
US initial jobless claims rose 10,000 to 277,000 last week vs. the Street view of 271,000.
(9:30 a.m. ET) Canada RBC manufacturing PMI for September
(10 a.m. ET) U.S. manufacturing ISM for September. Consensus for PMI is 50.7, down from 51.1 in August. For prices paid, consensus is 40.0, compared to 39.0 for the previous month
CORPORATE NEWS:
U.S. automakers will report sales for September. Analysts expect sales of 17.6 million on an annualized basis, up from 16.5 million last September. Canadian sales will also be released.
Canada's Bombardier Inc. is exploring the sale of a stake in any of its business areas, not just its rail unit, to ensure it can finish development of its delayed C Series jet, according to four sources familiar with the situation, Reuters is reporting. The company has hired investment bankers to look at a variety of financing options, the sources said, including selling aerospace or rail assets in full or in part, forming joint ventures or bringing in private equity investors.
ConAgra Foods Inc said it will cut about 1,500 jobs and outsource technology and back office positions to reduce costs, and move its headquarters to Chicago from Omaha next year. The maker of Slim Jim beef jerky and Chef Boyardee pasta said it expects to save at least $300 million within the next three years as a result of the cost cuts, with about $200 million coming from the job cuts. The layoffs represent about 30 per cent of ConAgra's office-based workforce.
Penn West Petroleum Ltd. says it expects to get about $205 million cash from the sale of some non-core assets in southeast Saskatchewan, the second divestiture since the Calgary-based company chopped its workforce by 35 per cent.
The Calgary-based company said Thursday it will reduce debt with proceeds from the sale of its 9.5 per cent working interest in the Weyburn unit.
Shares of Twitter were down 2 per cent in the premarket after a report that co-founder and interim CEO Jack Dorsey was to be named permanent CEO.
Earnings include: McCormick & Company Inc.; Micron Technology Inc.; Progress Software Corp.; Theratechnologies Inc.
ANALYST ACTIONS:
Celgene was up 1.9 per cent in the premarket after J.P. Morgan raised its rating on the stock to "overweight" from "neutral."
QUOTE OF THE DAY:
"Lots of companies don't succeed over time. What do they fundamentally do wrong? They usually miss the future." - Larry Page
Jennifer Dowty