The TSX appears set for a higher start Monday, led by the materials sector. Metal prices are up sharply, with gold and copper both up more than 1 per cent and silver 2 per cent, thanks in part to a weaker U.S. dollar against major currencies.
The dollar index, which pits the greenback against a basket of six other major currencies, is down about 0.4 per cent this morning to 82.113, the lowest level since April 17. Bids in the U.S. currency have weakened in recent sessions amid signals the American economy is still showing only very modest growth, a concern underlined Friday when gross domestic product figures failed to meet economists' expectations. A weaker U.S. dollar makes commodities cheaper to purchase in foreign currencies.
The plunge in gold prices earlier this month ignited a surge in physical buying, several reports suggest, which has aided the metal in its recovery. Meanwhile, the majority of market participants believe gold will continue to see a price recovery this week, according to the latest Kitco News survey, while HSBC on Friday said bullion has been oversold. Also last week, Goldman Sachs withdrew its recommendation for investors to short gold.
The Chinese and Japanese markets were closed overnight for a holiday, and in Europe, the Italian stock market led gains. Investors there were encouraged by a government debt auction that saw borrowing costs for Italy fall to multi-year lows. Ten-year bonds were auctioned at an average yield of 3.94 per cent, down from 4.66 per cent at an auction last month, and the lowest yield since October 2010. Italy successfully formed a government this weekend led by Prime Minister Enrico Letta after inconclusive elections earlier this year.
Data in Europe this morning weren't uplifting; an economic morale indicator for the euro zone fell for a second straight month to below economists' forecasts, highlighting the region's difficult road out of recession. The European Central Bank could cut interest rates as early as this week.
Now, here's a closer look at what's going on this morning and what's coming up.
MARKETS:
Equities:
U.S. futures: S&P Toronto 60 +0.4 per cent; S&P 500 +0.3 per cent; Dow +0.3 per cent; Nasdaq +0.4 per cent
Hong Kong's Hang Seng index +0.15 per cent
Shanghai composite index Closed
Japan's Nikkei Closed
London's FTSE 100 -0.02 per cent
Germany's DAX +0.39 per cent
France's CAC 40 +0.71 per cent
Italy's FTSE MIB +1.44 per cent
Commodities:
WTI (Nymex Jun) +0.39 per cent at $93.36 (U.S.) a barrel
Gold (Comex Jun) +1.17 per cent at $1,470.60 (U.S.) an ounce
Silver (Comex July) +2.01 per cent at $24.27 an ounce.
Copper (Comex July) +1.05 per cent at $3.22 (U.S.) a pound
Currencies:
Canadian dollar up 0.0057, or 0.59 per cent, at $0.9860 (U.S.)
ECONOMIC INDICATORS TO WATCH:
The U.S. Commerce Department said personal income grew 0.2 per cent in March, versus expectations for growth of 0.4 per cent. Personal spending rose 0.2 per cent, higher than the flat reading that was expected.
(10 a.m. ET) The U.S. National Association of Realtors reports on pending home sales in March. Economists expect an annual rise of 6.1 per cent.
STOCKS TO WATCH:
Research In Motion Ltd. shares are up 3 per cent in the premarket. Jefferies analyst Peter Misek issued a research note this morning saying the Q10 smartphone launch in the U.K. went well and the the Z10 continues to hold its own in key markets.
Two hedge funds are buying into troubled retailer J.C. Penney, according to the New York Post. It said one of the funds, worth more than $10-billion (U.S.), scooped up a stake of between 5 per cent and 10 per cent. Shares in J.C. Penney are up 3.2 per cent in the premarket.
Valeant Pharmaceuticas International Inc. and Actavis Inc. of New Jersey are reportedly at an impasse in talks to combine the two companies.
BHP Billiton Ltd. has agreed to sell its Pinto Valley copper mine and a railroad in Arizona to Capstone Mining Corp. for $650-million.
Earnings today include: Embraer SA; Fiat SpA; Herbalife Ltd.; Loews Corp.; Newmont Mining Corp.; Suncor Energy Inc.; Tembec Inc.; Volkswagen AG
THIS MORNING'S TOP INVESTING READS ON THE WEB:
14 cheap dividend stocks among the top-performing U.S. sectors.
The most shorted stocks within the S&P 500.
The spread between high-yield bonds and the S&P 500 index has dropped to a new low.
Sell in May and go away is a losing strategy if based on seasonality alone.
Tips for investing in this choppy market.
How rising interest rates will impact preferred shares.
Why Apple should stop worrying about its share price.
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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