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 and Happy Thanksgiving to our U.S. readers.
With U.S. markets closed for the Thanksgiving holiday, it looks to be a quiet, but positive, day for the TSX composite index. S&P/TSX 60 index futures are up 2 points.
Overseas in the Pacific Rim, it was a mixed session; however, many major markets experienced moves of less than one per cent. In Japan, the Nikkei 225 edged higher by half a per cent. The Hang Seng was basically flat, down just 0.04 per cent. In China, the Shanghai composite and Shenzhen composite both declined by 0.3 per cent and 0.8 per cent, respectively. The Shenzhen composite was up 2.5 per cent during the first three trading days of this week, and up over 16 per cent month-to-date, so today's weakness may have been some profit taking by investors. Including today's pullback, the Shanghai composite index has rallied over 35 per cent since the beginning of October.
Turning to major European markets, they are continuing their uptrends as investors look forward to next week's European Central Bank (ECB) meeting and anticipate further monetary easing measures will be announced. The German DAX is up over 170 points or 1.6 per cent. The Xetra DAX has increased over 4 per cent month-to-date. In France, the CAC is up 1.2 per cent, and the London FTSE is ahead by 0.7 per cent. There was more positive news out of Europe with the release of third-quarter gross domestic product out of Spain. The euro zone's fourth-largest economy grew a solid 3.4 per cent year-over-year.
Commodity markets are quiet today. The price of gold is up a dollar to $1,071 (U.S.). On Wednesday, crude oil futures jumped over the $43 (U.S.) level on the back of a smaller-than-expected build in U.S. oil inventory levels, as well as a decline in the U.S. rig count.
Here's the bottom line. Equity markets are expected to be quiet for the balance of the week; however, next week will be active. On December 3, further monetary policy easing measures are likely to be announced at the ECB's policy meeting, which may drive the euro down closer to parity with the U.S. dollar. Next Friday, U.S. November non-farm payroll data will be released and likely seal the deal for a December 16 rate hike. On Wednesday, there were a slew of data supporting a rate increase such as strong October durable goods orders data and lower-than-expected initial jobless claims. Fed fund futures are now pricing in a 72 per cent probability of a December rate hike. Fed members have clearly communicated their intentions, so I would place this figure closer to 100 per cent. As well, next week, is fourth-quarter earnings week for Canadian banks. On Tuesday, the Bank of Montreal and Bank of Nova Scotia will be reporting quarterly results. On Wednesday, the Royal Bank and National Bank report, followed by CIBC, TD Bank and Canadian Western Bank reporting on Thursday. Lastly, adding more fuel to the markets will be next Friday's Organization of the Petroleum Exporting Countries (OPEC) meeting. OPEC is anticipated to hold steady on current oil production levels which could cause the price of oil to drift back down to closer to the $40 level.
Now, here is a closer look at major markets and news.
MARKET DATA:
Equities
Hong Kong's Hang Seng -0.04 per cent
Shanghai composite index -0.33 per cent
Japan's Nikkei +0.49 per cent
London's FTSE 100 +0.70 per cent
Germany's DAX +1.57 per cent
France's CAC 40 +1.25 per cent
Stoxx 600 +0.83 per cent
Commodities
WTI crude oil (Nymex Jan) -0.23 per cent at $42.94 (U.S.) a barrel
Gold (Comex Feb) +0.17 per cent at $1,071.50 (U.S.) an ounce
Copper (Comex Mar) +2.22 per cent at $2.09 (U.S.) a pound
Currencies
Canadian dollar -0.03 at 75.18 cents (U.S.).
U.S. dollar index +0.023 at 99.818
Bonds
U.S. 10-year Treasury yield 2.23 per cent, -0.0036
ECONOMIC INDICATORS:
(8:30 a.m. ET) Canada survey of employment, payrolls and hours for September
(2 p.m. ET) Ontario economic and fiscal update
CORPORATE NEWS:
No major earnings reports scheduled.
QUOTE OF THE DAY:
"If a fellow isn't thankful for what he's got, he isn't likely to be thankful for what he's going to get." - Frank A. Clark
Jennifer Dowty