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.
World markets have been mixed overnight on a combination of technical exhaustion and traders waiting for employment reports in North America today and voting results in Europe (Italy's referendum and Austria's President) this weekend.
U.S. index futures are down with the Nasdaq still getting hit harder falling 0.5 per cent relative to the 0.1 per cent drop in Dow futures. The FTSE and the Dax are both down 0.9 per cent or more while Italy's FTSEMIB is down only 0.7 per cent indicating bigger declines earlier this week may have already priced in a No win and the potential resignation of PM Matteo Renzi.
Crude oil has paused to consolidate two days of big gains with WTI levelling off in the $50 to $51.50 (U.S.) range, near the top of the trading range that has dominated since the summer. The ruble is having a correction while the Canadian dollar and Norwegian krone are holding steady. Gold, meanwhile, appears to be finding support near $1,170. The pound is climbing again today on speculation the U.K. government may pursue a soft Brexit, following yesterday's openness to paying money to the EU for continued market access with overnight comments suggesting an openness to migration to fill low skilled jobs where it suits the national interest while ending free movement in other areas.
Today's spotlight is squarely on the U.S. nonfarm payrolls and Canada employment reports. In Canada, the economy unexpectedly created 11,000 jobs in November, as an increase in part-time positions offset a loss of full-time work. This marked the second consecutive month where the creation of part-time work outpaced full-time hours. The jobless rate eased to 6.8 per cent last month from 7 per cent in October, according to Statistics Canada's monthly labour report released on Friday.
And in the U.S., employers boosted hiring in November and the unemployment rate dropped to a more than nine-year low of 4.6 per cent, making it almost certain that the U.S. Federal Reserve will raise interest rates later this month. Nonfarm payrolls increased by 178,000 jobs last month, the Labor Department said on Friday. The solid gains in employment likely reflect rising confidence in the economy. Economists had forecast payrolls rising by 175,000 jobs last month and the unemployment rate unchanged at 4.9 per cent.
The U.S. jobs report could still have an influence on how many rate hikes traders are expecting for 2017. In recent weeks the U.S. dollar rally has gone from pricing in two increases next year to four or five so the dollar could be active on the employment news. Any signs of softness could spark a correction in the greenback. Traders may recall that last year the U.S. dollar peaked in early December ahead of the Fed's last rate increase. The change in manufacturing jobs may attract more attention than usual with President-elect Donald Trump focusing on saving or bringing back blue collar jobs.
Canada's employment figures could influence trading in the loonie today. After lagging initially, the Canadian dollar has started to respond to the positive oil market action and strong Canadian GDP reports. Traders now look to the job figures for signs that the strong third-quarter momentum has continued into the fourth quarter. I think that for the second month in a row the Street is being way too pessimistic about Canada. The consensus estimate is a loss of 15,000. I think we could see a 20,000-job increase and a rebound in full-time positions. Job creation could play a key role in indicating whether the Bank of Canada is still under pressure to cut interest rates next week or not.
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 8:50 a.m. ET)
Dow -0.13 per cent; S&P 500 -0.18 per cent; Nasdaq: -0.23 per cent; TSX 60 -0.14 per cent
Equities
Japan's Nikkei -0.47 per cent
Shanghai composite index -0.88 per cent
Hong Kong's Hang Seng -1.37 per cent
Germany's DAX -0.78 per cent
London's FTSE -0.71 per cent
France's CAC 40 -1.13 per cent
Commodities
WTI crude oil (Nymex Jan.) +1.31 per cent at $50.39 (U.S.) a barrel
Gold (Comex Feb.) +0.41 per cent at $1,174.20 (U.S.) an ounce
Copper (Comex March) -1.25 per cent at $2.61 (U.S.) a pound
Currencies
Canadian dollar +0.09 at 75.15 cents (U.S.)
U.S. dollar index -0.11 at 100.93
Bonds
Canada 10-year bond yield -2.74 at 1.64 per cent
KEY ECONOMIC RELEASES
Euro Area producer price index
(8:30 a.m. ET) Canada employment for November. Consensus is unchanged from October.
(8:30 a.m. ET) Canada unemployment rate for November. Consensus is 7.0 per cent, unchanged from October.
(8:30 a.m. ET) Canada average hourly wages for November. Estimate is an increase of 1.6 per cent year over year.
(8:30 a.m. ET) Canada labour productivity for Q3. Consensus is a 1.1-per-cent increase from Q2.
(8:30 a.m. ET) U.S. nonfarm payrolls for November. Consensus is an increase of 175,000 from October.
(8:30 a.m. ET) U.S. unemployment rate for November. Consensus is 4.9 per cent, unchanged from previous month.
(8:30 a.m. ET) U.S. average hourly earnings for November. Consensus is an increase of 0.2 per cent from October and 2.8 per cent year over year.
(1 p.m. ET) Baker-Hughes rig count
KEY STOCKS TO WATCH
Also see: Friday's small-cap stocks to watch
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National Bank says its fourth-quarter net income was down 11.5 per cent from the same time last year, falling to $307-million from $347-million, as it recorded a number of higher expense items. After excluding restructuring and certain other items in both years, National Bank's adjusted profit for the quarter was up 11 per cent, rising to $463-million from $417-million. Its revenue was up 12 per cent to $1.57-billion from $1.41-billion. National Bank's net income amounted to 78 cents per share, down from 95 cents per share in the fourth quarter of fiscal 2015, while the adjusted earnings rose to $1.24 per share from $1.16 per share a year earlier. The bank says its dividend to common shareholders will rise by two per cent to 56 cents per share, payable Feb. 1.
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Starbucks fell 3.13 percent to $56.68 in premarket trading after the coffee chain operator said Howard Schultz would step down as chief executive officer in 2017.
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Ulta Salon rose 6.24 percent to $273.46 after the company reported quarterly revenue above analysts' expectations.
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Earnings include: National Bank of Canada
With files from wire services