Investors are doing some bargain hunting after another sharp sell-off on Wednesday, with North American stock futures ticking up this morning and European indexes in the green. Commodity prices are also looking stronger this morning for the most part, but copper is still under pressure after entering a bear market on Wednesday - defined as a more than 20 per cent drop from a recent peak.
Today will be dominated by a slew of big-cap U.S. corporate earnings, which will come under a lot of scrutiny given the market's concerns about whether corporate health is strong enough to justify the big rally in U.S. equities this year. We detail those reporting under our stocks to watch section.
So far, the earnings season has continued the trend from recent quarters where the majority of companies announce better-than-expected profits - but top-line results have been much less encouraging. Of the S&P 500 stocks that have reported first-quarter results so far, 71 per cent have beaten analysts' predictions on earnings but only 52 per cent on sales, according to Bloomberg data.
European markets found some support overnight from lawmakers in Germany approving participation in the $13-billion (U.S.) bailout of Cyprus. The unstable political situation in Italy will be in the news again; its parliament will begin the selection of a new president today.
Asian markets mostly fell overnight, reacting to weak commodity prices, although Chinese stocks edged up after some positive data. Foreign direct investment into China rose 5.65 per cent in March from a year earlier, beating expectations. And home prices in China rose in 68 of 70 cities in March, up from 66 in February - suggesting that if there is a real estate bubble in the country, it's not popping yet.
Now, here's a closer look at what's going on this morning.
MARKETS:
Equities:
U.S. futures: S&P Toronto 60 +0.4 per cent; S&P 500 +0.5 per cent; Dow +0.4 per cent; Nasdaq +0.4 per cent
Hong Kong's Hang Seng index -0.26 per cent
Shanghai composite index +0.19 per cent
Japan's Nikkei -1.22 per cent
London's FTSE 100 +0.43 per cent
Germany's DAX +0.48 per cent
France's CAC 40 +0.85 per cent
Italy's FTSE MIB +0.87 per cent
Commodities:
WTI (Nymex Jun) +1.06 per cent at $87.89 (U.S.) a barrel
Gold (Comex Jun) +0.82 per cent at $1,394.00 (U.S.) an ounce
Silver (Comex May) +0.44 per cent at $23.41 (U.S.) an ounce
Copper (Comex May) -1.05 per cent at $3.17 (U.S.) a pound
Currencies:
Canadian dollar up 0.0023, or 0.24 per cent, at $0.9767 (U.S.)
ECONOMIC INDICATORS TO WATCH:
U.S. jobless claims rose by 4,000 to 352,000 last week, more than the 347,000 that was forecast.
(10 a.m. ET) The U.S. releases the Philadelphia Fed Survey's general business conditions index. A reading of 3.3 is forecast, up from 2.0 in March.
STOCKS TO WATCH:
Nokia said its net sales fell 20 per cent to 5.9 billion euros from a year earlier, while phone volumes tumbled 30 per cent from the previous quarter. It forecast margins in its devices and services business would be "approximately negative 2 per cent" in the second quarter, down from a positive 0.1 percent in the first quarter. Shares are down 10 per cent in the premarket.
Morgan Stanley reported adjusted first quarter earnings of 61 cents, 4 cents better than Street expectations. Revenue of $8.50-billion beat expectations for $8.34-billion. But shares are down 2 per cent in the premarket.
PepsiCo Inc. reported adjusted per-share earnings of 77 cents, up 12 per cent from a year ago and beating analysts forecasts for 70 cents.
EBay Inc. late Wednesday said profit will be 61 cents to 63 cents in the second quarter on revenues of $3.8-billion to $3.9-billion, below Street forecasts.
Apple Inc. shares are up 0.7 per cent in the premarket after falling 5 per cent on Wednesday. An audio chips supplier to the iPhone and iPad saw a glut of inventory in its recent quarter, which suggested to some that demand for Apple products was on the wane.
Other earnings today include: Advanced Micro Devices Inc.; Capital One Financial Corp.; E*Trade Financial Corp.; Freeport-McMoRan Copper & Gold Inc.; Google Inc.; International Business Machines Corp.; Microsoft Corp.; Omnicom Group Inc.; Philip Morris International Inc.; Sherwin-Williams Co.; Snap-On Inc.; TransForce Inc.; Union Pacific Corp.; UnitedHealth Group Inc.; Verizon Communications Inc.
Moody's Investor's Service has placed Barrick Gold Corp. on review for a possible rating downgrade of its senior unsecured debt rating after the company was forced to halt work on an $8.5-billion (U.S.) gold mine in the Andes mountains between Chile and Argentina. But shares are up 2.4 per cent on the premarket after being clobbered over the past week.
THIS MORNING'S TOP INVESTING READS ON THE WEB:
The real story in the stock market these days is perhaps being told by the Dow Jones Transportation Average. And it's a potentially worrisome story indeed.
The bull case for Apple.
Why it suddenly pays to own the natural gas ETF.
VIX ETFs have been lagging even as the fear index has spiked.
Copper has fallen below a key level and the warning signs are flashing.
Charting the size of the monetary base may not work so well for gold investors anymore.
Gold's fall has cost hedge fund manager John Paulson at least $1.5-billion so far this year.
ETFs may offer the most effective way for individual investors to exploit the momentum phenomenon.
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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
Darcy Keith