U.S. stock futures are steady to slightly higher this morning, a signal that investors may be in the mood to do some light bargain hunting after Wall Street stocks Tuesday suffered their worst day since June and the TSX tumbled nearly 170 points - erasing all its gains for this month.
The threat of a potential U.S.-led attack on Syria - and the risk that the conflict could spread to other parts of the Middle East - is still very much in focus. According to the Washington Post, the U.S. will publicly release evidence of how supporters of Syria's government used chemical weapons against its citizens as early as Thursday. The report will be one of the final steps that the Obama Administration is taking before deciding on a military strike against Syria, which now appears almost inevitable, the Post reported.
The geopolitical risks associated with military action in the Middle East have investors turning away from riskier assets such as stocks and moving into gold, a typical haven at times of uncertainty. Gold prices are again edging up this morning after rising 2 per cent on Tuesday in New York. The move put bullion more than 20 per cent above intraday lows on June 28 - officially entering a bull market.
Crude oil is also continuing to track higher this morning, with the October contract for West Texas Intermediate oil hitting a high so far of $112.24 - its highest level in more than a year and a half. Brent crude traded as high as $117.34 this morning. Société Générale thinks oil has yet to peak, predicting in a new research report that Brent will reach $125 in coming days either in anticipation of an attack on Syria or headlines that an attack has started. If there's significant supply disruptions in the region resulting from any conflict, it thinks Brent could rise to $150.
Not surprisingly, overseas equity markets were weak after trading turned nasty on Wall Street Tuesday, with many European and Asian indexes down more than 1 per cent. Emerging markets continued their trip south, with the Turkish lira and Indian rupee sliding to record lows.
But there was little in the way of panic selling, and the steady tone in stock futures this morning may be exposing a new line of thought that could be positive for stocks as the seasonal weak month of September approaches: decreased likelihood that the U.S. Federal Reserve will begin tapering its massive bond-purchasing program. Countries such as Turkey, Brazil and especially India are facing major challenges in keeping their economies afloat, which has negative ramifications to economies elsewhere. Meanwhile, higher oil prices threaten to dampen growth in global economies, including the United States. It could lead to the Fed postponing the start of its tapering, which many had expected to get underway in September but now appears somewhat less likely.
Now, here's a closer look at what's going on this morning and what's to come.
Futures: S&P 500 +0.05 per cent; Dow +0.05 per cent; Nasdaq +0.10 per cent; S&P Toronto -0.15 per cent
Hong Kong's Hang Seng -1.60 per cent
Shanghai composite index -0.12 per cent
Japan's Nikkei -1.51 per cent
London’s FTSE 100 -0.56 per cent
Germany’s DAX -0.98 per cent
France's CAC 40 -0.30 per cent
WTI crude oil (Nymex Oct) +1.39 per cent at $110.53 (U.S.) a barrel
Gold (Comex Dec) +0.28 per cent at $1,424.30 (U.S.) an ounce
Copper (Comex Dec) -0.60 per cent at $3.32 (U.S.) a pound
Canadian dollar at 95.23 (U.S.), down 0.0023 from yesterday's North American close.
U.S. dollar index up 0.13 at 81.30
U.S. 10-year Treasury yield 2.75 per cent, down 0.03
ECONOMIC INDICATORS TO WATCH:
(10 a.m. ET) U.S. releases its pending home sales index for July, forecast to fall 1 per cent from June. The sales index for June was down 0.4 per cent, though this followed a 5.8 per cent jump in May.
STOCKS TO WATCH:
National Bank of Canada reported adjusted third-quarter earnings per share of $2.22, beating expectations. It did not raise its dividend.
Bombardier Inc. and Russia's Rostekhnologii have signed a letter of intent for 50 Q400 aircraft, with options for 50 more, in a deal worth up to $3.39-billion.
Joy Global Inc. said its adjusted profit in its fiscal third quarter fell to $1.70 a share from $1.87 on sales of $1.32-billion, beating expectations of $1.37 per share earnings on revenue of $1.28-billion. But it cut its order outlook and shares are off 4 per cent in the premarket.
New Gold Inc. said there was pit wall movement at its Cerro San Pedro mine and some production has been suspended.
RBC Dominion Securities analyst Stephen D. Walker downgraded Minera IRL Ltd. to “sector perform” from “outperform,” concerned with liquidity pressures at the company as it moves forward with its Don Nicolas project.
Other earnings today include: Corby Distilleries; Canadian Western Bank; Brown-Forman Corp.; Coldwater Creek Inc.; Seadrill Ltd.; Tilly’s Inc.; Wi-Lan Inc.; Williams-Sonoma Inc.; Zale Corp.; and Woolworths Ltd.
THIS MORNING'S TOP INVESTING READS ON THE WEB:
Syria and the pullback in emerging markets could very well put the Fed's tapering plans on hold.
A bet that this coming September will see a decline needs to be based on more than just the dismal historical odds, writes Mark Hulbert.
The chief operating officer of bond giant Pimco is partly blaming the financial media for the huge bond market exodus.
Canadian mutual fund advisers could soon be selling ETFs.
A primer on finding the right ETFs for meeting financial goals.
There are plenty of skeptics on gold's future even as bullion enters a new bull market.
Its stock price has zoomed under her leadership and employee morale has improved, but Felix Salmon thinks Marissa Mayer may not have been the right CEO pick for Yahoo in the long run.
Europe's emerging markets are rising above the storm that has hit other developing economies.
The premarket report is constantly updated to reflect the latest news developments and market moves. For instant headlines on breaking economic and corporate news in the premarket, follow Darcy Keith on Twitter at @eyeonequities. You can also be notified using our dashboard feature when new articles appear from this author. Read more on using this feature here.