Colin Cieszynski
The Before the Bell report is compiled by editors of The Globe and Mail and is updated throughout the morning to reflect latest developments. Colin Cieszynski, Chartered Financial Analyst and Chartered Market Technician, is chief market strategist with CMC Markets.
Stock markets around the world have been holding steady overnight as the selloff in the U.S. dollar sparked by a soft U.S. ISM non-manufacturing PMI report ran its course. Gold, U.S. index futures and the FTSE are flat this morning while the Dax is up 0.3 per cent. Asia Pacific markets finished their day down slightly. Crude oil continues to bounce back with West Texas Intermediate and Brent both up about 0.8 per cent.
Emerging markets were strong, hitting their highest in more than a year as expectations of a rise in U.S. Federal Reserve interest rates receded after weak U.S. economic data. Emerging market shares touched their strongest levels since July, 2015, as investors sought yield with interest rates likely to stay low for a prolonged period.
Monetary policy trends and speculation has been the main focus of trading overnight. Sweden's Riksbank maintained its (0.50 per cent) benchmark rate boosting Swedish krona a bit. It did not cut deeper into negative territory with inflation picking up, although it didn't change any of its forecasts.
Next up is the Bank of Canada's decision due at 10 a.m. EDT. The bank is expected to maintain its overnight rate at 0.50 per cent. Earlier in the summer, some of the central bank's other resource exporting countries cut rates giving Governor Stephen Poloz scope to do the same. A cut this month appears unlikely as recent Canada data has been distorted by the Fort McMurray wildfire. Also, decisions to hold by the Reserve Bank of Australia and Sweden's Riksbank this week have reduced outside dovish pressure.
The Bank of Canada has been willing to let the Canadian dollar do the heavy lifting for the last year and this may continue. Traders may look to the Bank's statement for signs of whether the expected summer rebuilding rebound has materialized or not, and if a rate cut could be possible later in the year.
The U.S. dollar regained its footing after sliding about 1.0 per cent against most majors after San Francisco Fed President John Williams indicated he's still looking for a rate hike sooner or later. The hawkish camp dominates today's agenda with Richmond Fed President Jeffrey Lacker and Kansas City Fed President Esther George speaking.
Sterling's recovery has lost a bit of steam today after industrial and manufacturing production reports and ahead of testimony from Bank of England Governor Mark Carney later today. The yen and euro also may be influenced on speculation surrounding the European Central Bank meeting later this week and the Bank of Japan meeting later this month.
Now, here is a closer look at what's going on this morning and what is still to come.
MARKET DATA:
Futures (as of about 7:30 a.m. ET)
Dow -0.06 per cent; S&P 500 -0.09 per cent; Nasdaq: +0.08 per cent; TSX 60 +0.02 per cent
Equities
Japan's Nikkei -0.41 per cent
Shanghai composite index +0.05 per cent
Hong Kong's Hang Seng -0.19 per cent
Germany's DAX +0.28 per cent
London's FTSE +0.04 per cent
France's CAC 40 +0.18 per cent
Commodities
WTI crude oil (Nymex Oct.) +0.89 per cent at $45.23 (U.S.) a barrel
Gold (Comex Dec.) -0.05 per cent at $1,353.20 (U.S.) an ounce
Copper (Comex Dec.) +0.72 per cent at $2.10 (U.S.) a pound
Currencies
Canadian dollar +0.08 at 77.86 cents (U.S.)
U.S. dollar index +0.01 at 94.83
Bonds
Canada 10-year bond yield -0.9893 at 1.01 per cent
KEY ECONOMIC RELEASES
Japan leading index
China trade surplus and foreign direct investment
Germany industrial production
(10 a.m. ET) Bank of Canada policy announcement
(10 a.m. ET) Canada Ivey PMI
(10 a.m. ET) U.S. Job Openings & Labor Turnover Survey for July
(2 p.m. ET) U.S. Beige Book
KEY STOCKS TO WATCH
Apple shares were up 0.40 per cent at $108.13 (U.S.) in thin premarket trading. The world's most valuable public company is expected to unveil the new iPhone 7 later on Wednesday.
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Canadian department store operator Hudson's Bay Co. reported a 60-per-cent jump in quarterly sales, helped by its expansion in Europe and the acquisition of online retailer Gilt. Hudson's Bay, which owns U.S. luxury retail chain Saks Fifth Avenue, bought German department store chain Galeria Kaufhof and its Belgian subsidiary, Inno, from Metro for about $2.7-billion last year.
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Canadian department store operator Sears Canada Inc reported a quarterly loss, compared with a year-earlier profit, hurt by a 15.6 per cent fall in sales.
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Activist investor William Ackman left the board of Canadian Pacific on Tuesday, marking the end of a four-year tenure that helped overhaul the ailing railroad company and earn his hedge fund roughly $2.6-billion. Canadian Pacific announced Ackman's resignation almost exactly one month after his Pershing Square Capital Management sold its remaining 9.8 million CP shares, freeing up roughly $1.5-billion in cash to make other investments.
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Chipotle rose 6.3 per cent to $439.75 (U.S.) after activist investor William Ackman's hedge fund Pershing Square bought a 9.9-per-cent stake in the burrito chain operator.
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Valeant rose 2.1 per cent to $30.10 (U.S.) after the company and Progenics announced the U.S. commercial launch of FDA-approved Relistor tablets.
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Sony is expected to unveil a new version of its PlayStation video game console.
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Hard disk drive maker Western Digital raised its current quarter earnings forecast to $1 (U.S.) to $1.05 per share, compared to the current consensus estimate of 90 cents a share. The company said the recent acquisition of SanDisk expanded its customer base and contributed to a more favoUrable product mix.
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Tegna, the former Gannett digital business, announced plans to spin off its Cars.com unit as a separate publicly traded company, and is also evaluating strategic alternatives for its CareeerBuilder business.
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Southwest Airlines expects third quarter revenue per available seat mile to drop 3.5 per cent to 4.5 per cent, with about a half point of that drop resulting from July's computer system disruption.
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Restaurant chain Dave & Buster's reported quarterly profit of 50 cents per share, beating forecasts by 6 cents a share. Its revenue was also above forecasts. The company did cut its full-year forecast for comparable-store sales, but said that its combination of arcade games and sports viewing give it at least partial insulation from overall industry trends.
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A fire at Gap's distribution center in Fishkill, New York, last week was set intentionally, according to the New York State Police department. The apparel retailer issued a statement saying it will be able to resume some functions at the facility this week.
See also: Wednesday's small-cap stocks to watch
Earnings include: Currency Exchange International Corp.; DavidsTea Inc.; Hewlett Packard Enterprise Co.; Imvescor Restaurant Group Inc.; Valspar Corp.
With files from wire services