North American stock markets are set to reopen with only minor moves this morning after the three-day holiday weekend. Trading activity was mixed overnight, with Asian markets lower but European stocks getting an uplift from a report showing rising consumer confidence in Germany.
U.S. stock futures are a little higher, but the resource-heavy TSX will struggle to stay in positive territory as key commodity prices this morning - including gold and oil - are tracking lower.
The ZEW Center for European Economic Research reported that its index of German investor and analyst expectations rose to 48.2 this month from 31.5 in January. The much sharper-than-expected gain left it at its highest level since April 2010. Spirits were also buoyed in Europe by Spain reporting a trade deficit for January of 1.29-billion euros, about half of what economists had forecast.
The market tone earlier in Asia was decidedly different. Chinese and Hong Kong stocks lost more than 1 per cent after local Chinese governments imposed more restrictions on home purchases. And in Tokyo, stocks also lost some ground after Japanese Finance Minister Taro Aso downplayed prospects that the government will buy foreign bonds after Prime Minister Shinzo Abe told parliament one day earlier that it was "one idea" for supporting the economy.
Here in North America, many traders are likely to stay on the sidelines amid worries about the large spending cuts set to take effect on March 1 in the United States, the so-called sequester. There has been little in the way of negotiations between Democrats and Republicans on a deal to limit the cuts, which may dampen economic conditions in the world's biggest economy later this year.
Some investors are also staying on the sidelines given feelings that the market could be due for a pullback after seven straight weekly gains for the S&P 500. Consider this: average daily price moves for the index have fallen to 0.43 per cent this year from an average of 1.08 per cent over the past five years, according to Bloomberg News. That's the steepest drop for any corresponding period since the 1930s.
Now, here's a closer look at what's going on this morning.
MARKETS:
Equities:
U.S. futures: S&P 500 +0.2 per cent; Dow +0.2 per cent; Nasdaq +0.2 per cent
Hong Kong's Hang Seng index -1.02 per cent
Shanghai composite index -1.59 per cent
Japan's Nikkei -0.31 per cent
London's FTSE 100 +0.30 per cent
Germany's DAX +0.80 per cent
France's CAC 40 +1.04 per cent
Commodities:
WTI (Nymex Apr) -2.01 per cent at $95.93 (U.S.) a barrel
Gold (Comex Apr) -1.35 per cent at $1,668.60 (U.S.) an ounce
Copper (Comex May) -1.97 per cent at $3.68 (U.S.) a pound
Currencies:
Canadian dollar down 0.9871, or 0.25 per cent, at $0.9871 (U.S.)
ECONOMIC INDICATORS TO WATCH:
(10 a.m. ET) U.S. housing market index for February. Economists expect a reading of 48, up from last month's 47. A reading above 50 means more builders describe conditions as good than bad.
STOCKS TO WATCH:
Office Depot Inc. shares are up about 25 per cent in premarket trading and OfficeMax Inc. are up 13 per cent after The Wall Street Journal reported that the two retailers are in merger discussions.
Canadian life insurer Great-West Lifeco Inc. has agreed to buy Irish Life Group Ltd for $1.75-billion.
Earnings today include: Herbalife Ltd.; Cimarex Energy; Dell Inc.; El Paso Electric Co.; Fidelity National Financial Inc.; Fresh Del Monte Produce Inc.; InterContinental Hotels Group PLC; La-Z-Boy Inc.; Marriott International Inc.; and Medtronic Inc.
THIS MORNING'S TOP INVESTING READS ON THE WEB:
This might be time to pull back, not dive into stocks: Historical fund patterns don't support the so-called great rotation argument.
Investors are fleeing U.S. junk bond funds.
10 rules of investing from Wall Street guru Bernard Baruch.
Americans are warming back up to the idea that housing can be a solid investment.
Silicon Valley is betting that online gambling is its next billion-dollar business.
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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