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 continue their remarkable post-election turnaround. Dow futures continue to move into record territory adding over 100 points to the 1,000-point-plus rebound from Tuesday's overnight lows to Wednesday's close. S&P futures are up 0.6 per cent while Nasdaq futures are up 0.8 per cent.
Overseas markets are also cheering the results. The Nikkei staged a massive 6.7 per cent catch-up rally overnight, also boosted by a weakening yen. European indexes also continue to climb this morning with the FTSE up 0.6 per cent and the Dax up 1 per cent.
Two factors appear to be driving markets higher. First, is a sense of relief that this incredibly long and exhausting 18-month U.S. election campaign is finally over. Ignoring the typical protests and temper tantrums from the losing side, traders appear relieved that the campaign has ended in a decisive result with one party in control of the White House, Senate and House, giving them the ability to implement an agenda for change.
Second, traders appear to be applauding what looks like a once-in-a generation political realignment and the potential for a business growth agenda to take hold with the potential to benefit the broader economy particularly depressed regions and not just the elites.
Third, it looks like there will be some continuity at the U.S. Federal Reserve with the market thinking Chair Janet Yellen may see out her term and that moves toward normalizing interest rates would be welcomed by the incoming administration. Some of the doves at the Fed most closely linked to the Obama Administration have lost clout following the election particularly Lael Brainard. Today's speech from St. Louis Fed President James Bullard, who swings back and forth between the two camps and has been dovish lately, may give a better idea of which way the wind is blowing at the Fed.
A number of stocks and sectors staged big moves yesterday as the Street sorted out winners and losers from the election fallout. Areas that gained include traditional energy, infrastructure (heavy equipment, engineering, construction), pharmaceutical and biotech companies, banks and brokers (potential for less regulation) miners (especially gold companies) and others.
Markets that lost ground included hospitals and health insurers which had benefited from Obamacare, alternative energy sectors that had benefited from Obama initiatives and some companies exposed to trade.
The risk of a renegotiation of NAFTA and other Trump promises continues to weigh heavily on the Mexican peso. The Canadian dollar has stabilized following a smaller decline. Some companies in Canada dependent on cross border trade were impacted by trade concerns like auto parts producer Magna International. The potential for trade disputes to impact the auto sector in particular may also explain why platinum has been underperforming gold and silver lately.
The potential for increased infrastructure spending driving higher demand for metals and building materials has copper soaring another 3.7 per cent today, leading gains in base metals that could also drive renewed interest into the shares of base metal mining companies.
Interestingly, the euro has been getting absolutely crushed in the wake of the U.S. election particularly against the pound and the U.S. dollar, the two countries where populist campaigns have been successful this year. This may be a recognition that the pendulum of politics is starting to swing in a different direction leaving the moribund EU uncompetitive. It also may reflect growing recognition the increased potential for populist or Euroskeptic movements succeeding at upcoming votes in Italy, Germany and particularly France could put the struggling euro project at risk.
Today, the focus in Canada shifts back to earnings with positive results out this morning from Canadian Tire and Manulife Financial while earnings and guidance from Bombardier were mixed. WestJet announced an 18.7 per cent increase in traffic over last year, outpacing 14.8 per cent growth in capacity.
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 8:45 a.m. ET)
Dow +0.47 per cent; S&P 500 +0.43 per cent; Nasdaq: +0.52 per cent; TSX 60 +0.45 per cent
Equities
Japan's Nikkei +6.72 per cent
Shanghai composite index +1.36 per cent
Hong Kong's Hang Seng +1.89 per cent
Germany's DAX +0.40 per cent
London's FTSE -0.23 per cent
France's CAC 40 +0.60 per cent
Commodities
WTI crude oil (Nymex Dec.) -0.51 per cent at $45.04 (U.S.) a barrel
Gold (Comex Dec.) +0.68 per cent at $1,282.20 (U.S.) an ounce
Copper (Comex Dec.) +3.96 per cent at $2.56 (U.S.) a pound
Currencies
Canadian dollar -0.21 at 74.33 cents (U.S.)
U.S. dollar index +0.38 at 98.88
Bonds
Canada 10-year bond yield +4.53 at 1.41 per cent
KEY ECONOMIC RELEASES
Japan machine orders and Bank of Japan summary of opinions at Oct. 31-Nov. 1 meeting.
(8:30 a.m. ET) U.S. initial jobless claims for week of Nov. 5. Estimate is 261,000, a decline of 4,000 from week of Oct. 29.
Fewer Americans sought unemployment aid last week, the latest sign that companies are holding onto their workers. The Labor Department says weekly applications for jobless benefits fell 11,000 to a seasonally adjusted 254,000. That's down from a three-month high in the previous week. The four-week average, a less volatile measure, ticked up 1,750 to 259,750.
(8:30 a.m. ET) Canada new housing price index for September. Estimate is an increase of 0.1 per cent from August and a 2.7-per-cent rise year over year.
Canadian new housing prices rose by 0.2 percent in September from August, the 18th consecutive increase, on continued strength in the major markets of Toronto and Vancouver, Statistics Canada said on Thursday. The advance matched the forecast of analysts in a Reuters poll.
(10:30 a.m. ET) EIA natural gas report
(2 p.m. ET) U.S. budget deficit for October. Estimate is $81.9-billion, a decline from $136.6-billion in October of 2015.
KEY STOCKS TO WATCH
See also: Thursday's small-cap stocks to watch
Shares of drug stocks such as Amgen Celgene and Gilead rose on Trump's victory and after California voters turned down a ballot initiative aimed at reining in rising prices for prescription drugs.
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Tech heavyweights Apple, Facebook, Microsoft and Alphabet were up about 0.9 percent in premarket trading. The stocks were mainly responsible for the decline in the technology index on Wednesday.
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Kohl's soared 7.7 percent to $49.20 after the department store operator reported a 21.7 percent rise in quarterly profit.
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Plane and train maker Bombardier Inc. reported lower-than-expected adjusted net loss on Thursday and said it expected to finish the year with improved operating margins in all of its businesses.
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Manulife Financial Corp., Canada's biggest life insurer, reported a better-than-expected quarterly profit, primarily driven by growth in Asia.
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Canadian Tire Corp Ltd. reported a better-than-expected quarterly profit, helped by higher sales of sports gear and apparel, and the retailer increased its quarterly dividend.
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Insurance company MetLife announced a new $3 billion share repurchase program, marking a return to buybacks after a suspension earlier this year. It's shares were up 1.13 per cent in premarket trading.
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ConocoPhillips unveiled a new $3 billion share repurchase program as well as saying it would initiate a $5 billion to $8 billion asset divestiture program. It's shares were up 0.8 per cent in premarket trading.
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Party City fell four cents a share short of estimates, with quarterly earnings of eight cents per share. Revenue was also short of expectations.
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ConAgra Brands' spin-off of its Lamb Weston business is complete as of today, and the food producer's name changes from ConAgra Foods.
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Shake Shack reported quarterly profit of 15 cents per share, one cent a share above estimates. Revenue also beat forecasts. It also raised its full-year guidance. It's shares were up 9.6 per cent in premarket trading.
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Twitter's Chief Operating Officer Adam Bain is leaving the company to explore other opportunities. He'll be replaced by Chief Financial Officer Anthony Noto, and the company will look for a new CFO. It's shares were down 1.4 per cent in premarket trading.
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Mylan earned an adjusted $1.38 per share for its latest quarter, seven cents a share shy of estimates. The drugmaker's revenue missed the mark, as well, hurt by the controversy over pricing of its EpiPen product. It's shares were up 1.2 per cent in premarket trading.
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Taser International came in a penny a share above estimates, with quarterly profit of seven cents per share. Revenue beat Street forecasts as sales of body cameras surged. Taser also announced the departure of Chief Financial Officer Dan Behrendt to pursue other opportunities. Its shares were up 8.8 per cent in premarket trading.
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Alexion Pharmaceuticals will delay filing its quarterly report as it investigates allegations of improper sales practices by a former employee. Its shares were up 0.01 per cent in premarket trading.
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Perrigo, which makes store-branded generic drugs plans to review options for the rights to royalties from multiple sclerosis drug Tysabri. Activist investor and stakeholder Starboard Value has been pressuring the drug maker to execute moves that will help its stock price. Its shares were up 3.6 per cent in premarket trading.
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AstraZeneca reported falling revenue, but rising earnings, as it counters competition for its cholesterol drug Crestor with cost cutting, growth in new products, and asset sales. Its shares were down 5.8 per cent in premarket trading.
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Yahoo disclosed in an SEC filing that it is investigating a possible hacking, looking into whether an unidentified hacker can access its user account data. Its shares were up 1.4 per cent in premarket trading.
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Pfizer is considering a possible sale of spin-off of its consumer health division, according to Reuters. The unit could be worth as much as $14 billion. Its shares were up 2.3 per cent in premarket trading.
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Earnings include: Ag Growth International Inc.; Alamos Gold Inc.; Algonquin Power & Utilities Corp.; ARC Resources Ltd.; Athabasca Oil Corp.; Bonterra Energy Corp.; Canadian Energy Services and Technology Corp.; Cott Corp.; Crescent Point Energy Corp.; Delphi Energy Corp.; Enercare Inc.; Enterprise Group Inc.; Equitable Group Inc.; Etrion SA; Extendicare Inc.; Fiera Capital Corp.; Fiera Capital Corp.; GDI Integrated Facility Services Inc.; Glacier Media Inc.; Guardian Capital Group Ltd.; Guyana Goldfields Inc.; High Arctic Energy Services Inc.; Imperial Metals Corp.; K&S AG; Leon's Furniture Ltd.; Lundin Gold Inc.; Macy's Inc.; Nordstrom Inc.; Nuvista Energy Ltd.; Perrigo Company PLC; Petrowest Corp.; Pine Cliff Energy Ltd.; Questerre Energy Corp.; Richmont Mines Inc.; RMP Energy Inc.; Sandstorm Gold Ltd.; Seabridge Gold Inc.; Spartan Energy Corp.; Sprott Inc.; Stantec Inc.; Total Energy Services Inc.; Tricon Capital Group Inc.; Vecima Networks Inc.; Walt Disney Co.; Yellow Pages Ltd.
With files from wire services, cnbc.com, marketwatch.com