U.S. stocks are set to pull back from record highs - and the TSX could see the steepest losses - as markets absorb a number of developments this morning on both the economic and corporate side.
Commodities are down sharply this morning, which should make for a rough start for the resource-heavy TSX. Gold is down about 1.9 per cent, to its lowest level in a week, amid a strengthening U.S. dollar and a general lack of interest in the metal given investors' preference right now for riskier assets. Crude oil is down 1.8 per cent amid ongoing demand concerns - which were heightened after think-tanks this week lowered their consumption forecasts. Base metals are also weaker.
The broader market has its own challenges this morning, as this week's rally to fresh record highs in the Dow and S&P 500 has made it vulnerable to a pullback if signs emerge of a worse-than-expected slowdown in corporate earnings growth or in the economic recovery.
A couple of the huge U.S. banks have reported earnings this morning: JPMorgan Chase & Co. and Wells Fargo & Co. In both cases, profits beat expectations but revenues came up short. Shares in both companies are down about 1 per cent in the premarket.
A full roster of U.S. economic data is also being released. We detail that below, but retail sales data for March is so far garnering the most attention. It suffered its steepest decline in nine months, adding further pressure to U.S. stock futures and economically sensitive commodities.
Overseas markets aren't setting an encouraging backdrop, with European indexes quite deep in the red amid more worries about Cyprus and the debt crisis in the region. Finance ministers for the euro zone are meeting in Dublin today, discussing loan extensions for Ireland and Portugal and the recent aid agreement for Cyprus. A government official from Cyprus had reportedly said that the country would seek an increase in the €10-billion ($13-billion U.S.) in aid that European countries have promised, which sparked some knee-jerk selling in equity markets. But euro zone finance ministers later said there were no plans or requests to raise that amount. Instead, they said Cyprus is considering putting European Union structural funds to earlier use to help its stricken economy.
Now, here's a closer look at what's going on this morning.
U.S. futures: S&P 500 -0.5 per cent; Dow -0.4 per cent; Nasdaq -0.5 per cent
Hong Kong's Hang Seng index -0.06 per cent
Shanghai composite index -0.57 per cent
Japan's Nikkei -0.47 per cent
London’s FTSE 100 -0.42 per cent
Germany’s DAX -1.19 per cent
France's CAC 40 -0.73 per cent
Italy's FTSE MIB -1.14 per cent
WTI (Nymex May) -1.80 per cent at $92.16 (U.S.) a barrel
Gold (Comex Jun) -1.91 per cent at $1,535.00 (U.S.) an ounce
Copper (Comex May) -1.59 per cent at $3.38 (U.S.) a pound
Canadian dollar down 0.0024, or 0.24 per cent, at $0.9873 (U.S.)
ECONOMIC INDICATORS TO WATCH:
The U.S. Commerce Department said March retail sales fell 0.4 per cent, the steepest decline in nine months. Economists had expected activity to be unchanged.
The U.S. Labour Department said the producer price index in March fell 0.6 per cent, below the 0.1 per cent drop expected by economists.
(955 a.m. ET) U.S. releases the latest consumer sentiment figures. A reading of 79.0 is expected, up from 78.6.
(10 a.m. ET) U.S. releases February business inventories, expected to rise 0.4 per cent from 1.0 per cent the previous month.
STOCKS TO WATCH:
Telus Corp. has entered talks to buy Mobilicity in a deal that sources say could value the target at between $350-million and $400-million.
JPMorgan reported first-quarter earnings per share of $1.59, beatings expectations for $1.37. But revenues of $25.1-billion missed Street forecasts for $25.87-billion. The bank also increase its dividend. Shares are down 1 per cent in the premarket.
Wells Fargo reported first-quarter earnings per share of 92 cents versus expectations of 88 cents, but revenues of $21.3-billion were below Street forecasts of $21.6-billion. Shares are down 1 per cent in the premarket.
Other earnings out today include: Dollarama Inc., and Shaw Communications Inc.
THIS MORNING'S TOP INVESTING READS ON THE WEB:
The New York Times on how gold, after all these years considered as a secure investment, has lost its luster.
Goldman Sachs thinks Japanese stocks can rise another 20 per cent.
What investors should know before they dive into private equity funds for the masses.
A hedge fund is planned to bet on a recovery in Greece.
Short interest has reached a 12-month low in the U.S., suggesting bears are throwing in the towel.
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