Overseas markets are up and futures for North American indices are rising, suggesting that stocks could advance at the opening bell in Canada and the United States.
The day’s optimism derives from efforts by Germany and France to find a way to backstop Spain’s banking crisis without requiring the euro zone’s fourth-largest economy to seek an official bailout.
Investors are also hopeful that a meeting by the European Central Bank could produce signs that the ECB is considering adding more stimulus to the economy. Recent economic reports indicating that the economies of both the U.S. and China are slowing as the European financial crisis deepens, are fuelling speculation that the world’s most powerful central banks will have to launch more stimulus measures. Because a lot of the liquidity produced by such stimulus goes into equities and commodities, the markets are rising.
ECB president Mario Draghi kept interest rates unchanged on Wednesday, as most economists had expected. He will offer the central bank’s latest thoughts on the economy at a press conference later this morning. The latest economic data showed that first-quarter growth stalled in the 17-nation euro zone, but the region narrowly avoided a recession – technically defined as two quarters of contraction.
In the U.S., investors will be watching the U.S. Federal Reserve this afternoon when the central bank releases its Beige Book, which offers a read on the country’s economic state.
China’s Hang Seng index up 1.4 per cent
Japan’s Nikkei 225 index up 1.8 per cent
London’s FTSE 100 up 1.5 per cent
France’s CAC 40 up 2.1 per cent
Germany’s DAX index up 1.9 per cent
Spain’s IBEX 35 index up 2.9 per cent
Canadian dollar up 0.44 cents to 96.78 cents
Oil $1.29 (U.S.) to $85.58 a barrel
Gold up 1.3 per cent to $1,638.20 an ounce
Copper futures up 2.2 per cent to $3.364
8:30 a.m. The final figures for U.S. non-farm business productivity in the first-quarter are expected to have declined by an annualized rate of 0.8 per cent, slightly more than the 0.5 per cent seen in last month’s preliminary data. In comparison, productivity rose by 1.2 per cent in the fourth quarter.
10:30 a.m. The U.S. Energy Information Administration releases its weekly report on petroleum inventories in the U.S.
2:00 p.m. The release of the Federal Reserve’s Beige Book in advance of the monetary policy meetings of the Federal Open Market Committee on June 20. The publication gives a read on the latest economic conditions and is widely watched by investors. The market is likely to pay particularly close attention to the employment picture offered.
Stocks to watch:
Canadian companies reporting today include Harry Winston Diamond Corp., Laurentian Bank of Canada and Major Drilling Group International.