Japan is once again at the centre of the market's attention today, as the Nikkei suffered yet another big drop overnight amid renewed strength in the yen. But unlike last week, the selling frenzy in Japanese equities isn't spreading so far to other global markets, including here at home.
U.S. and Canadian stock futures are modestly higher after erasing earlier losses, and major European markets are solidly higher.
The Nikkei plunged 5.2 per cent to 13,589 - the first time it's closed below 14,000 since May 2.
May 2 is less than a month ago, which highlights just how far the Nikkei has advanced this year, so global market players aren't panicking over the pullback that has seen the market fall 10 per cent from its peak. Today's drop also wasn't accompanied by a rise in bond yields, which last week was partly blamed for the volatility in Japanese stocks. The yield on the 10-year Japanese government bond slumped about 5 basis points to 0.89 per cent overnight, according to FactSet data.
But gains in the Japanese currency were seen overnight, a concern given it could dampen export growth. The U.S. dollar fell as low as ¥100.54 overnight, and major exporters such as Sharp Corp. were among the biggest decliners.
Traders have been growing concerned that the U.S. Federal Reserve could soon taper its aggressive bond-buying program given recent signals of strength in the U.S. economy. U.S. jobs and gross domestic product data this morning showed, however, that growth in the world's biggest economy is still sluggish.
U.S. Treasury bond yields hit their highest level in more than a year Wednesday, as the credit market places bets that central bank tightening may not be that far away. That's making income-producing stocks less attractive. The spread between the S&P 500 dividend yield and the 10-year Treasury yield is at its narrowest in about the year, according to Reuters.
Now, here's the rundown of what else is happening this morning and what's to come.
Futures: S&P Toronto +0.27 per cent; S&P 500 +0.44 per cent; Dow +0.35 per cent; Nasdaq +0.36 per cent
Hong Kong's Hang Seng -0.31 per cent
Shanghai composite index -0.26 per cent
Japan's Nikkei -5.15 per cent
London’s FTSE 100 +0.40 per cent
Germany’s DAX +0.83 per cent
France's CAC 40 +1.08 per cent
Italy's FTSE MIB +1.08 per cent
WTI crude oil (Nymex Jly) -0.54 per cent at $92.63 (U.S.) a barrel
Gold (Comex Aug) +0.58 per cent at $1,399.90 (U.S.) an ounce
Copper (Comex July) +0.53 per cent at $3.31 (U.S.) a pound
Canadian dollar up 0.0001, or 0.01 per cent, at $0.9662 (U.S.)
ECONOMIC INDICATORS TO WATCH:
The U.S.'s latest revision to first-quarter GDP showed growth of 2.4 per cent, a touch lower than the previous estimate of 2.5 per cent.
U.S. initial jobless claims last week rose 10,000 to 354,000, higher than the 340,000 that was forecast.
Canadian industrial prices fell 0.8 per cent in April from March, while raw materials prices dropped 2.2 per cent.
(10 a.m. ET) U.S. releases pending home sales index for April. Economists expect a rise of 1.4 per cent, slowing slightly from 1.5 per cent in March.
STOCKS TO WATCH
Royal Bank of Canada reported second-quarter profit of $1.27, just shy of analysts' expectations.
Canadian Imperial Bank of Commerce raised its dividend as it reported profit of $2.12 a share, topping expectations.
Facebook is up 3 per cent in the premarket after receiving two upgrades to buy from Jefferies and BMO.
Costco Wholsale Corp. reported a 19 per cent rise in quarterly profit as sales rose 8 per cent.
Clearwire Corp. shares are up 15 per cent in the premarket after Dish Network Corp. raised hits bid for Clearwire to $4.40 a share in cash.
Alcoa Inc. debt was cut to a junk rating by Moody's late Wednesday, with a stable outlook, amid the downward decline in the aluminum price. Shares are down 1.4 per cent in the premarket.
Other earnings today include Descartes Systems Group Inc. and Lions Gate Entertainment Corp.
THIS MORNING'S TOP INVESTING READS ON THE WEB:
Wednesday's headline in USA Today could be a signal we're at a market top.
"Bubble" references on Twitter are soaring.
When it comes to Japanese stocks, the "buy-the-dip" mentality remains firmly in place.
The CEO of money manager BlackRock thinks the bull market has another five to six years left.
Defensive areas of the market are getting whacked.
The housing sector of the U.S. stock market is reeling from a rise in mortgage rates.
20 investment grade individual bonds with yields over 5 per cent.
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.