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.
December begins with crude oil still in rally mode building on Wednesday's explosive gains as traders respond favourably OPEC's agreement to cut production. A meeting with non-OPEC producers is planned for next week to nail down that side as well. Progress toward managing supply after a two-year war over market share that depressed prices is being seen as a positive for the oil market regardless of the actual details. WTI is trading up 0.8 per cent near the $50 (U.S.) level, just below the top of the trading range that has been in place for the last six months.
The big question for oil prices now is what level would be enough to bring shut-in U.S. shale production back on stream. This year traders have been capping the price just above $50, but some agencies have suggested lately that the tipping point could be closer to $60.
Stock markets around the world are trading mixed through the release of manufacturing PMI reports, the first reading on how economies have performed this month. The FTSE is down 1 per cent on a soft reading out of the U.K. while the Dax is down 0.8 per cent. Reports out of China and Japan were a bit better than expected helping the Nikkei to gain 1.1 per cent and the Hang Seng to rise 0.4 per cent. U.S. index futures are mixed as traders await U.S. PMI figures later this morning and U.S. nonfarm payrolls tomorrow. Traders will be looking for confirmation of yesterday's positive ADP payrolls and Chicago PMI reports and more signs of a post-election surge.
In currency trading today the U.S. dollar has slipped back slightly and is still showing signs of topping. Traders may look to upcoming data less for signs of whether the U.S. Federal Reserve will raise in December, which looks like a lock, and more about how many rate hikes could follow in 2017. The incoming Treasury Secretary Steven Mnuchin had nice things to say about Fed chair Janet Yellen, further indicating she is likely to finish out her term which ends in January, 2018. The pound and euro have capitalized on the U.S. dollar's rally. The Canadian dollar is also strengthening, although so far gains appear light relative to the positive oil price and Canadian GDP tailwinds that have emerged this week. Canadian banks could be active again today with CIBC turning in strong earnings and a dividend increase while TD Bank met expectations.
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 9:00 a.m. ET)
Dow +0.10 per cent; S&P 500 +0.10 per cent; Nasdaq: +0.01 per cent; TSX 60 +0.12 per cent
Equities
Japan's Nikkei +1.12 per cent
Shanghai composite index +0.74 per cent
Hong Kong's Hang Seng +0.39 per cent
Germany's DAX -0.82 per cent
London's FTSE -1.08 per cent
France's CAC 40 -0.38 per cent
Commodities
WTI crude oil (Nymex Jan.) +0.97 per cent at $49.92 (U.S.) a barrel
Gold (Comex Feb.) -0.25per cent at $1,171.00 (U.S.) an ounce
Copper (Comex March) -0.44per cent at $2.62 (U.S.) a pound
Currencies
Canadian dollar +0.09 at 74.56 cents (U.S.)
U.S. dollar index -0.34 at 101.15
Bonds
Canada 10-year bond yield +4.05 at 1.62 per cent
KEY ECONOMIC RELEASES
Japan manufacturing PMI
China manufacturing PMI, non-manufacturing PMI and Caixin manufacturing PMI
Euro Area jobless rate and manufacturing PMI
(8:30 a.m. ET) U.S. initial jobless claims for week of Nov. 26. Estimate is 253,000, an increase of 2,000 from previous week.
The number of Americans filing for unemployment benefits rose more than expected last week, hitting their highest level in five months, but the underlying trend remained consistent with a strengthening labor market.
Initial claims for state unemployment benefits increased 17,000 to a seasonally adjusted 268,000 for the week ended Nov. 26, the Labor Department said on Thursday. That was the highest level since June and marked the second straight week of increases.
(9:30 a.m. ET) Canada Markit manufacturing PMI for November.
(10 a.m. ET) U.S. manufacturing ISM (PMI) for November. Consensus is 52.2, up from 51.9 in October.
(10 a.m. ET) U.S. construction spending for October. Consensus is an increase of 0.6 per cent from September.
Also: U.S. Ward's total vehicle sales for November. Consensus is 17.7 million (annualized rate) and Canada auto sales for November.
KEY STOCKS TO WATCH
Also see: Thursday's small-cap stocks to watch
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Canadian Imperial Bank of Commerce, Canada's fifth-biggest lender, reported a better-than-expected quarterly profit, driven by a strong profit in its capital markets business and boosted it dividend.
The bank's total net income rose to $931 million, or $2.32 per share, from $778 million, or $1.93 cents per share, a year earlier. Excluding items, the company earned $2.60 per share, beating the average analysts' estimate of $2.48, according to Thomson Reuters I/B/E/S. CIBC also raised its dividend to $1.24 per share from $1.21 per share.
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Toronto-Dominion Bank, Canada's second-biggest lender, on Thursday reported a rise in fourth-quarter earnings, in line with market expectations, driven by strong growth at its U.S. retail business.
The bank said its earnings rose to $1.22 per share in the fourth quarter to Oct.31, up from $1.14 in the same period the year before, matching the average forecast by analysts according to Thomson Reuters I/B/E/S.
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Brookfield Asset Management Inc. has entered exclusive talks on a takeover of Bharti Infratel Ltd., India's largest listed wireless tower owner, after submitting a bid valuing the company at about $11-billion, according to a report by Bloomberg News, quoting people with knowledge of the matter.
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Canadian Western Bank reported a 9.7 per cent fall in its fourth-quarter earnings as low commodity prices weighed on its oil and gas loan portfolio. The company, which mainly lends to clients in the western provinces of Canada, including oil-rich Alberta, said its total allowance for credit losses increased almost 10 per cent to $103.8-million in the quarter ended Oct. 31.
The bank's net income attributable to shareholders fell to $47.8-million, or 54 cents per share, from $53-million, or 66 cents per share, a year earlier.
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McDonald's was downgraded to "neutral" from "buy" at Guggenheim. The firm said it sees limited upside at current valuations. Its shares were down 0.44 per cent in premarket trading.
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Clarcor, a maker of filtration products, is being bought by Parker Hannifin for $4.3 billion in cash and assumed debt, or $83 per share. Clarcor's shares were up 16.4 per cent in premarket trading while Parker Hannifin's shares were up 0.77 per cent.
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Apparel retailer Lands' End reported a larger than expected quarterly loss, although revenue exceeded forecasts. Its shares were up 7 per cent in premarket trading.
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Mobileye, the maker of autonomous car technology, was rated "buy" at Needham, which said the company has a significant first mover advantage. Its shares were up 1.8 per cent in premarket trading.
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Walt Disney raised its semi-annual dividend by 10 percent to 78 cents per share. That brings the total dividend for 2016 to $1.49 per share, up from $1.37 a year ago. Its shares were up 0.7 per cent in premarket trading.
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Pure Storage lost 10 cents per share for its latest quarter, five cents less than analysts were expecting. The data storage company's revenue beat forecasts, benefiting from the addition of new customers. Its shares were up 0.4 per cent in premarket trading.
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Bluebird Bio shares soared 22.6 percent to $74 in premarket trading after the gene-therapy developer said patients undergoing its multiple myeloma treatment showed strong benefits.
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Dollar General fell 5 percent to $73.50 after the discount retailer reported a surprise drop in third-quarter comparable sales.
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Express Inc. and Guess Inc. dropped 13 percent each after the apparel and accessories retailers cut their full-year profit forecasts.
Earnings include: Canadian Imperial Bank of Commerce; Canadian Western Bank; Dollar General Corp.; Donaldson Company Inc.; Kroger Co.; PWC Capital Inc.; Sears Canada Inc.; Smith & Wesson Holding Corp.; Tecsys Inc.; Toronto-Dominion Bank; Workday Inc.
With files from wire services