After a two-day decline in stock prices, is it time to buy on the dip? Some investors are betting the answer is yes this morning, as U.S. stock index futures are solidly in positive territory and European markets are posting healthy gains. The TSX should open higher, with stronger commodity prices acting as a tailwind.
Stocks have been largely in retreat since the Fed on Wednesday spooked the market by releasing minutes from its recent meeting that suggesting the central bank may not be all that committed after all to open-ended stimulus. But bulls still have plenty of factors working in their favour, including the robust fourth-quarter earnings season that unofficially wrapped up Thursday with Wal-Mart and global economic data that's pointing to signs of further recovery.
Today, there was some encouraging data out of Europe to entice investors to keep bidding up stocks. A German business confidence survey for February rose to a 10-month high, rising to 107.4 from 104.3 in January. Not all the economic news was great though for the euro zone. The European Commission today downgraded its outlook for the region, forecasting gross domestic product will shrink 0.3 per cent this year, instead of the 0.1 per cent growth it expected it forecast in November.
Italy will be in focus over the weekend as its parliamentary election begins. The stock market there could come under pressure and send shockwaves through the euro zone if a hung government arises out of the vote. Poll results suggest a win by Democratic Party leader Pier Luigi, who holds pro-market economic views. But whether he can form a stable coalition with a majority in both houses of the country's parliament is much less certain.
Now, here's a look at what else you need to know this morning.
U.S. futures: S&P 500 +0.5 per cent; DJIA +0.4 per cent; Nasdaq +0.4
Hong Kong's Hang Seng index -0.54 per cent
Shanghai composite index -0.51 per cent
Japan's Nikkei +0.68 per cent
London’s FTSE 100 +0.83 per cent
Germany’s DAX +1.06 per cent
France's CAC 40 +1.83 per cent
WTI (Nymex Apr) +0.29 per cent at $93.12 (U.S.) a barrel
Gold (Comex Apr) +0.13 per cent at $1,580.70 (U.S.) an ounce
Copper (Comex May) +0.25 per cent at $3.58 (U.S.) a pound
Canadian dollar down 0.0066, or 0.67 per cent, at 0.9758 (U.S.)
ECONOMIC INDICATORS TO WATCH:
Statistics Canada said inflation rose 0.5 per cent in January from a year ago, a little less than the 0.7 per cent consensus.
Statistics Canada said retail sales slid 2.1 per cent in December from November, steeper than the 0.3 per cent drop economists had expected. Weakness in the auto sector accounted for much of the drop.
STOCKS TO WATCH:
Hewlett-Packard Co. late Thursday said profit and sales dropped it its fiscal first quarter, but the results still bear analysts' expectations and the stock is up nearly 5 per cent in the premarket.
American International Group. Inc. reported an unexpected operating profit after the closing bell on Thursday. Shares are up 4 per cent in the premarket.
Texas Instruments Inc raised its quarterly dividend by a third and said it would buy back an additional $5-billion in stock.
Earnings today include: Abercrombie & Fitch Co.; Air France KLM SA; Barnes Group Inc.; Eldorado Gold Corp.; Enerplus Corp.; Onex Corp.; and Valeo SA.
THIS MORNING'S TOP INVESTING READS ON THE WEB:
Seven signs that stocks are about to slide further.
Dennis Gartman has changed his opinion on stocks.
Bullish sentiment from individual investors has dropped for the fourth straight week.
The case against commodities and emerging markets.
The five biggest investing lies on Wall Street right now.
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