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 drifting lower into the weekend. U.S. index futures are down 0.4 per cent, the Dax and CAC are down 1.3. per cent or more, Italy's FTSEMIB is down 2.1 per cent while the U.K. FTSE has fallen into the red as well after being positive earlier in the session.
News flow has been light overnight, but there has been quite a bit of chatter out of Europe about the European Central Bank staying the course on stimulus, and out of Japan pushing for more stimulus at the Bank of Japan's meeting next week.
Interestingly, despite reports that some in the EU are planning on taking a hard line with the U.K. over Brexit in the hope that London will get frustrated and give up, the FTSE is outperforming continental indices today. It appears traders have recognized economic data from both sides of the channel indicate that so far Brexit and the accompanying fall in Sterling has benefited the U.K. more than the EU and that with Continental trade surpluses falling the EU appears to have a lot more to lose from Brexit than the UK.
Crude oil continues to bounce around wildly with a 1 per cent decline this morning, erasing yesterday's similar gains in West Texas Intermediate and Brent. There hasn't been any fresh news overnight so energy commodities continue to be buffeted by several factors including: big swings in U.S. stockpiles, speculation over U.S. and Chinese demand, slowing global demand, increased supply coming from Libya and Nigeria, and upcoming talks between OPEC producers and Russia. Down below $45 (U.S.), it looks like expectations of a deal coming out of the Algeria conference later this month are pretty low. We could see some trading action this afternoon on U.S. drill rig activity, which has bounced lately as is normal in the summer but is still well below where it was a year ago.
The U.S. dollar has been trading up slightly against gold and other major currencies this morning. The greenback could be active this morning around the consumer price inflation report, one of the last major pieces of data before next week's Fed meeting.
Apple may also remain in the spotlight with its big rally over the last few days on reports of strong demand for the new iPhone7 Plus. The big question facing Apple in particular is if momentum can continue into the weekend or if we could see come profit taking. It's quadruple witching day with a number of index and commodity futures and options expiring which could spark some volatility in the afternoon.
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 -0.38 per cent; S&P 500 -0.43 per cent; Nasdaq: -0.28 per cent; TSX 60 -0.29 per cent
Equities
Japan's Nikkei +0.70 per cent
Shanghai composite index -0.69 per cent
Hong Kong's Hang Seng +0.63 per cent
Germany's DAX -1.46 per cent
London's FTSE -0.39 per cent
France's CAC 40 -1.31 per cent
Commodities
WTI crude oil (Nymex Oct.) -1.62 per cent at $43.20 (U.S.) a barrel
Gold (Comex Dec.) -0.16 per cent at $1,315.80 (U.S.) an ounce
Copper (Comex Dec.) -0.32 per cent at $2.15 (U.S.) a pound
Currencies
Canadian dollar -0.25 at 75.73 cents (U.S.)
U.S. dollar index +0.20 at 95.48
Bonds
Canada 10-year bond yield -3.50 at 1.16 per cent
KEY ECONOMIC RELEASES
Euro area labour costs
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(8:30 a.m. ET) Canada manufacturing sales and new orders for July. Estimates are an increase of 0.5 per cent and unchanged, respectively, from June.
Canadian factory sales increased by 0.1 per cent in July from June as increased sales in food, metals and petroleum and coal products were offset by weakness in the aerospace and machinery sectors, Statistics Canada said on Friday.
Canadian manufacturing sales in July edged up by 0.1 per cent as strength in the food, energy and metals industries was offset by weakness in the machinery and aerospace sectors, Statistics Canada data indicated on Friday.
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(8:30 a.m. ET) Canada international securities transactions for July.
Foreign investment in Canadian securities slowed in July for the fourth straight month, largely because purchases of stocks collapsed from the 12-year highs seen in June, Statistics Canada said on Friday.
Non-residents purchased a net $5.23-billion in securities, down from $9.02-billion in June and $14-billion in May.
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(8:30 a.m. ET) U.S. consumer prices for August. Consensus is an increase of 0.1 per cent from July and 1.0 per cent year over year. Excluding food and energy, the consensus projections are increases of 0.2 per cent and 2.2 per cent, respectively.
U.S. consumer prices edged up 0.2 per cent in August as a surge in medical care offset flat readings for food and energy.
The result follows an unchanged figure in July. Core inflation, which excludes the volatile categories of food and energy, rose 0.3 per cent, the Labor Department reported Friday.
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(10 a.m. ET) U.S. University of Michigan Consumer Sentiment for September. Consensus is 91.0, up from 89.8 in August.
(12 p.m. ET) U.S. flow of funds for Q2
(1 p.m. ET) Baker-Hughes rig count.
(4 p.m. ET) U.S. net TIC flows for July.
KEY STOCKS TO WATCH
Deutsche Bank said it would fight a $14-billion (U.S.) demand from the U.S. Department of Justice to settle claims it missold mortgage-backed securities, a shock bill that raises questions about the future of Germany's largest lender.
The claim against Deutsche, which is likely to trigger several months of talks, far exceeds the bank's expectations that the DoJ would be looking for a figure of only up to €3-billion ($3.4-billion).
Deutsche Bank's U.S.-listed shares were down 8.2 pe rcent in premarket trading. Barclays, UBS , Credit Suisse and RBS were down between 3.3 per cent and 5.5 per cent.
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Exxon was down 1.9 per cent at $83.48 after the Wall Street Journal said the New York Attorney General was investigating the company's accounting practices.
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Apple, which has rallied for four days and been the one bright spot in the market on strong demand for its new iPhones, was flat at $115.50. The new phones hit stores on Friday.
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Oracle dropped 3.3 per cent to $39.50 after the company forecast lower-than-expected quarterly profit.
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Depomed soared 13 per cent after sources told Reuters the drug maker is preparing to put itself up for sale.
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Magna International Inc. will likely need to build a new assembly plant if it wins more contracts to manufacture vehicles, chief executive officer Don Walker says.
The Canadian auto parts giant and Germany-based car maker BMW AG announced Thursday that the new version of BMW's 5 Series sedan will be assembled at Magna's plant in Graz, Austria, beginning next year.
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Infor Financial Group Inc. has recruited a pair of renowned mining banking veterans as the boutique investment bank makes an aggressive push into the competitive resources market.
With files from wire services