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 to climb this morning particularly in Europe where the FTSE and the Dax are both up 1.5 per cent and Italy's FTSEMIB is up 1.2 per cent. U.S. index futures are slightly negative after trading at all-time highs.
Crude oil is also steady today with Tuesday's normal trading correction quickly fading. Late in the day a 2.2-million-barrel (mmbbl) drop in U.S. American Petroleum Institute inventories helped to shore up support once again as it indicates the oil market situation in the U.S. continues to improve with or without any OPEC deal. Oil may remain active through Wednesday's Department of Energy reports and through Saturdays meeting between OPEC and non-OPEC producers to nail down non-OPEC production cuts.
The loonie has also paused overnight as traders await the Bank of Canada's latest interest rate decision which is due mid-morning. The decision and statement could have a significant impact on trading in the Canadian dollar and Canadian stocks today.
The Bank of Canada is the only central bank of the major resource exporting countries that hasn't cut interest rates this year. Even though the Street is not expecting a cut, lingering speculation the Bank of Canada could go dovish just before the Fed goes hawkish and likely raises U.S. rates next week has been weighing on the Canadian dollar. In the last week, the loonie has underperformed crude oil because of this risk.
Truth is, the Canadian economy did rebound in the third quarter as shown by the recent strong GDP report. In addition, Canadian bank earnings were strong and employment growth has exceeded expectations the last two months indicating Canada's rebound momentum has continued into the fall and can continue to ramp up with oil prices rising and the service sector expanding. So, it looks like the central bank will likely maintain interest rates. A neutral to positive tone in the statement comments about the Canadian economy's direction could take the lid off the loonie, while a cautious to negative tone could keep the pressure on.
Trading in Europe today may remain active ahead of tomorrow's European Central Bank meeting where the central bank is expected to announce plans for what to do about its quantitative easing (QE) program, which is scheduled to end in March. Also in focus is continuing talk about a potential bailout of some kind for Italy's banks, reminding traders that some things need to be done regardless of who is in charge politically.
In currency markets, the pound has slipped back a bit following disappointing industrial and manufacturing reports for the U.K. Gold continues to stabilize and appears to be base building as the recent U.S. dollar rally comes to an end.
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 8:30 a.m. ET)
Dow -0.03 per cent; S&P 500 -0.10 per cent; Nasdaq: -0.14 per cent; TSX 60 +0.03 per cent
Equities
Japan's Nikkei +0.74 per cent
Shanghai composite index +0.70 per cent
Hong Kong's Hang Seng +0.55 per cent
Germany's DAX +1.43 per cent
London's FTSE +1.33 per cent
France's CAC 40 +0.74 per cent
Commodities
WTI crude oil (Nymex Jan.) -0.51 per cent at $50.67 (U.S.) a barrel
Gold (Comex Feb.) +0.49 per cent at $1,175.80 (U.S.) an ounce
Copper (Comex March) +0.30 per cent at $2.69 (U.S.) a pound
Currencies
Canadian dollar +0.02 at 75.29 cents (U.S.)
U.S. dollar index flat at 100.50
Bonds
Canada 10-year bond yield -3.44 at 1.60 per cent
KEY ECONOMIC RELEASES
China November foreign direct investment, trade surplus and Q3 real GDP
Japan October Leading Index
U.K. October industrial and manufacturing production.
(7:00 a.m. ET) U.S. mortgage applications for the week of Dec. 2.
(10:00 a.m. ET) Bank of Canada makes its monetary policy announcement. Expectations are for the central bank to hold rates steady.
(10:00 a.m. ET) U.S. October job openings and labour turnover survey.
(3:00 p.m. ET) U.S. October consumer credit. Consensus is +$17.5-billion.
KEY STOCKS TO WATCH
Also see: Wednesday's small-cap stocks to watch
Chicago-based PrivateBancorp on Wednesday postponed a shareholder vote due Thursday on a proposed takeover by Canadian Imperial Bank of Commerce saying shareholders needed more time to consider it in light of "significant changes to trading market conditions over the past few weeks."
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Nelson Peltz's Trian increased its stake in the restaurant chain Wendy's to 23.45 per cent from the prior 15.6 per cent.
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Southwest Airlines reported a 7.2 percent increase in revenue passenger miles in November from a year ago.
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UnitedHealth Group was upgraded to "buy" from "hold" by Cantor Fitzgerald, which said the stock has room to move higher despite a 34-per-cent year-to-date gain.
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RBC upgraded 3M to "sector perform" from "underperform," with a recent drop in the stock making its risk/reward profile more balanced. RBC also raised its price target to $171 (U.S.) from $155.
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Citi began coverage on chipmaker Micron Technology with a "buy" rating, pointing to rapidly improving fundamentals in the DRAM industry.
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MasterCard announced a 16 per cent increase in its quarterly dividend, to 22 cents per share , up from 19 cents. MasterCard also announced a new $4-billion share buyback program.
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Apple said Apple Pay transactions are up 500 per cent over a year ago, with Gap the latest retailer to add the service. As well, Apple Music now has 20 million subscribers, compared with 17 million in September, according to a Billboard report.
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Fitbit is near a deal to buy rival fitness device maker Pebble, according to Bloomberg, although the report said a deal will focus on Pebble's software assets.
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Western Digital rose 5.4 percent to $67.30 in light premarket trading after the data storage maker raised its second-quarter profit and revenue forecasts.
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Bluebird Bio fell 2.5 percent to $77 after the drugmaker priced a stock offering at a 3.7 percent discount to the stock's Tuesday close.
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Restaurant and arcade chain operator Dave & Buster's soared 13.5 percent to $54.50 after the company posted upbeat results for its latest quarter and raised its full-year revenue forecast.
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Earnings include: Costco Wholesale Corp.; Dollarama Inc.; H & R Block Inc.; Lululemon Athletica Inc.; Major Drilling Group International Inc.; ViXS Systems Inc.
With files from wire services