North American stocks are poised to open with some decent gains this morning after overseas markets rallied overnight, despite political developments this week that could turn into catalysts for profit-taking.
U.S. stock futures are up at least half a percentage point and commodities are enjoying gains of more than 1 per cent, pointing to a solid start for the TSX in particular.
Politics in both the U.S. and Italy dominate market concerns this week. The deadline for averting the so-called U.S. sequester - huge spending cuts - is this Thursday night, but there are few signs the U.S. political parties will reach a compromise on limiting their impact in time. The cuts would be phased in, but many economists believe they could significantly slow the recovery in U.S. GDP growth this year.
Meanwhile, polls in Italy close at 9 a.m. (ET) and results could have a significant impact on the euro zone's stock market. The vote, in many ways, is a referendum on the austerity and reform program of Prime Minister Mario Monti. Markets are hoping for a centre-left victory by Pier Luigi Bersani's Democratic Party in the lower house, with a Senate formed by Mr. Bersani teaming up with Mr. Monti. Strong backing for former leader Silvio Berlusconi is a risk that would not be welcome by markets.
Japan led gains in Asia overnight, as markets there cheered news of the expected nomination of Asian Development Bank President Haruhiko Kuroda as the next central bank governor. He's an advocate of aggressive monetary policy easing and the news sparked a further slide in the yen against the U.S. dollar to 33-month lows - giving Japan's critical export sector an addition boost.
In other news out of Asia overnight, China's manufacturing growth hit four-month lows this month, with HSBC's preliminary purchasing managers' index coming in at 50.4, down from a final 52.3 in January. With the reading above 50, however, it still represented growth.
Now, here's a more detailed look at what's going on this morning and what's to come later today.
U.S. futures: S&P 500 +0.5 per cent; Dow +0.4 per cent; Nasdaq +0.7 per cent
Hong Kong's Hang Seng index +0.16 per cent
Shanghai composite index +0.51 per cent
Japan's Nikkei +2.43 per cent
London’s FTSE 100 +0.70 per cent
Germany’s DAX +2.52 per cent
France's CAC 40 +1.75 per cent
WTI (Nymex Apr) +1.23 per cent at $94.28 (U.S.) a barrel
Gold (Comex Apr) +1.26 per cent at $1,592.90 (U.S.) an ounce
Copper (Comex May) +1.06 per cent at $3.59 (U.S.) a pound
Canadian dollar down 0.0046, or 0.47 per cent, at $0.9778 (U.S.)
ECONOMIC INDICATORS TO WATCH:
No major reports scheduled.
STOCKS TO WATCH:
Shares of Suncor Energy Inc. and Canadian Natural Resources Ltd. are on the rise today after the latest issue of Barron's said the two companies could gain more than 25 per cent in the next year, aided by valuable asset bases that may attract activist investors. U.S.-listed shares in Suncor are up 1.2 per cent in the premarket and Canadian Natural Resources is up 1.5 per cent.
Shares in Research In Motion Ltd. are up nearly 4 per cent in the premarket. An interview with CEO Thorstein Heins was published over the weekend in a German newspaper in which he said the company has ramped up production of the new BlackBerry 10 devices as sales exceeded internal forecasts.
The Wall Street Journal reported that Barnes & Noble Inc chairman Leonard Riggio is considering a bid for the company’s bookstore business. The stock is up 17 per cent in the premarket.
Home improvement retailer Lowe’s Cos. said that cleanup efforts after Superstorm Sandy and its new pricing strategy helped its fourth-quarter net income surpass expectations. Shares are up 2 per cent in the premarket.
Earnings today also include: Caesars Entertainment Corp.; Cooper Tire & Rubber Co.; Domino's Pizza Group PLC; FirstEnergy Corp.; Hertz Global Holdings Inc.; and Telefonica Brasil SA
THIS MORNING'S TOP INVESTING READS ON THE WEB:
What the 'unofficial' numbers say about China's economy.
A housing boom is forming in Phoenix, the city where many Canadians shopped for bargain-basement real estate in recent years.
Hedge funds are fleeing U.S. retailers.
Why silver's free fall may be coming to an end.
Five reasons not to worry about the dreaded sequester - ie spending cuts - that loom in the U.S.
Three principles of diligent contrarians.
Apple's cash hoard now accounts for 33 per cent of its market cap.
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