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 Friday morning to you.
Equity markets today look to open slightly higher. In the U.S., futures are positive. Dow futures are up 54 points, or 0.3 per cent. S&P 500 futures are higher by 4 points, or 0.2 per cent. Nasdaq futures are up 9 points, or 0.2 per cent. In Canada, the S&P/TSX 60 index futures are up 1 point.
It has been a positive week for equity markets. The S&P/TSX composite index has increased 3 per cent for the week. The Dow Jones Industrial Average, S&P 500 index, and Nasdaq composite are also all up 3 per cent for the week. Market momentum took a breather yesterday with major U.S. markets closing relatively unchanged and the TSX index advancing approximately half a percent.
Overseas in the Pacific Rim, it was a neutral to positive day. In Japan, the Nikkei 225 advanced one-tenth of a per cent with the Japanese yen strengthening, limiting the upside. In China, the Shanghai composite and Shenzhen composite gained 0.4 per cent and 1.3 per cent, respectively. Down under in Australia, the S&P/ASX 200 closed out a solid week with a gain of 0.3 per cent, ending 4 per cent higher for the week. Analysts and investors continue to shift their focus to 2016, which is providing support to equity markets.
Major European markets down slightly in today's trading session. The French CAC is down 0.3 per cent, and the German DAX and London FTSE are relatively unchanged, up less than a tenth of a per cent.
In terms of earnings, there are no companies in the S&P/TSX composite index slated to report earnings until next Tuesday, when Alimentation Couche-Tard and George Weston report quarterly results. In the U.S., there are no companies in the S&P 500 index scheduled to report today.
On the commodity front, the strength in the U.S. dollar continues to exert downward pressure on commodities, which is limiting their upside. The price of gold is up $7 to $1,085 (U.S.). Oil prices are holding above $40 (U.S.) , currently at $40.16. On Thursday, the price of natural gas futures dropped 3 per cent after the U.S. Energy Information Administration reported another build in inventory levels with storage levels now 5 per cent above the five-year average. This morning, the price of natural gas futures is $2.24 (U.S.), down three cents.
The Canadian dollar has been relatively unchanged this week, at 75 cents per U.S. dollar, and 70 cents per Euro. Canadian September retail sales data, and October inflation data, both released this morning at 8:30 a.m. (EST) could create some movement in currency markets.
Here's the bottom line. Central bank action will be the key focus for investors for the balance of the year, and several dates will be important for investors to mark on their calendars. The first is Wednesday, Dec. 2, when U.S. Fed Chair, Janet Yellen is speaking at the Economic Club in Washington. The following day, Dec 3, the European Central Bank (ECB) holds its monetary policy meeting with its interest rate decision. Further expansionary measures are anticipated to be announced in order to stimulate economic growth. Today, the European Central Bank President, Mario Draghi, delivered a speech at the European banking congress in Frankfurt, Germany where he indicated that, "growth momentum remains weak.". He went on to say that, "Looking forward, monetary policy will remain accommodative for as long as needed to secure a sustained adjustment in the path of inflation." and that, "if we decide the current trajectory of our policy is not sufficient to achieve our objective, we will do what we must to raise inflation as quickly as possible." This echoes his past remarks that the ECB will use all measures necessary and appropriate in order to facilitate growth.
Another key date is Friday, Dec. 4, with the release of U.S. November non-farm payroll data. A strong number will be the green light for the U.S. Federal Reserve to raise interest rates and take a "one and hold" interest rate position. Finally, mark Thursday, Dec. 16 on your calendars, with the first rate hike since 2006 expected by the U.S. Federal Reserve. Fed members have clearly indicated and informed investors that a rate hike is coming, essentially preparing the market for a December rate hike if the domestic economy continues to show it is strengthening.
Now, here is a closer look at major markets, and corporate and economic news.
MARKET DATA:
Futures
S&P 500 +0.3 per cent; Dow +0.4 per cent; Nasdaq: +0.2 per cent
Equities
Hong Kong's Hang Seng +1.13 per cent
Shanghai composite index +0.36 per cent
Japan's Nikkei +0.10 per cent
London's FTSE 100 +0.14 per cent
Germany's DAX +0.31 per cent
France's CAC 40 -0.10 per cent
Stoxx 600 +0.27 per cent
Commodities
WTI crude oil (Nymex Jan) -0.65 per cent at $41.45 (U.S.) a barrel
Gold (Comex Dec) +0.67 per cent at $1,085.10 (U.S.) an ounce
Copper (Comex Mar) +0.74 per cent at $2.10 (U.S.) a pound
Currencies
Canadian dollar -0.16 at 75.08 cents (U.S.).
U.S. dollar index +0.314 at 99.303
Bonds
U.S. 10-year Treasury yield 2.25 per cent, +0.0044
ECONOMIC INDICATORS:
Canadian retail sales unexpectedly fell in September, dragged down by lower gasoline prices and a decrease in sales at motor vehicle and parts dealers, data from Statistics Canada showed on Friday. Sales were down 0.5 percent, short of economists' expectations for a gain of 0.2 percent. Excluding the effects of price changes, sales volumes edged up 0.1 percent.
Canada's annual inflation rate held at 1.0 percent in October, remaining at the lower end of the central bank's target range as it was held down by cheaper energy prices, data from Statistics Canada showed on Friday. The figures were in line with economists' expectations that inflation would match September's reading.
CORPORATE NEWS:
Nike's shares jumped 4.3 per cent in the premarket trading after the Dow component announced a $12 billion share buyback and a 2-for-1 share split.
Footwear retailer Foot Locker Inc reported better-than-expected quarterly profit and sales, helped by strong demand for basketball and running shoes. The footwear retailer's were up about 5.2 per cent in premarket trading on Friday. Foot Locker said same-store sales rose 8.7 percent in the third quarter ended Oct. 31, more than the 6.1 percent rise analysts on average had expected, according to Consensus Metrix.
Apparel retailer Gap Inc late Thursday cut its 2015 profit forecast, hurt by a strong dollar and weak sales at its Banana Republic and Gap brands but Chief Executive Arthur Peck said the brands would see a material improvement in spring.
Intuit was up 12.3 per cent thin premarket trading after it forecast a full-year profit above estimates.
Square was up 3.2 per cent after its sparkling debut on Thursday.
Health insurer Aetna reaffirmed its full-year 2015 operating earnings forecast on Friday, a day after UnitedHealth Group Inc cut its guidance, blaming deteriorating performance in its individual Obamacare business. Aetna said its individual commercial business continued to perform in line with its expectations.
Other earnings today include: Abercrombie & Fitch Co; Hibbett Sports Inc; Sirona Dental Systems Inc.
QUOTE OF THE DAY:
"With the new day comes new strength and new thoughts" - Eleanor Roosevelt
Jennifer Dowty