North American stock markets are set to bounce back after getting walloped Monday in the worst day of the year so far for the major U.S. indexes.
There isn't a lot of news out this morning to account for the change in market tone; rather, there are feelings that the pullback was a bit overdone, given an environment where investors have started pouring big money back into equity funds and U.S. employment and housing markets are picking up steam.
U.S. stock futures suggest the S&P 500 may climb back above 1,500 again, although it's yet to be seen whether the Dow Jones industrial average can quickly regain 14,000. It closed at 13,880 on Monday after suffering a loss of nearly 130 points.
Losses Monday were ignited by rising bond yields in Spain and Italy after political developments in the two countries rekindled debt concerns. Bonds are recovering today, with Italy's two-year note yield sliding 11 basis points to 1.62 per cent from 1.77 per cent on Monday, the highest since Jan. 3.
European markets are mixed to higher this morning amid fresh data showing that private-sector activity across the euro zone continued to shrink in January, but at a pace that was the slowest in 10 months. Retail sales data for the region, meanwhile, fell 0.8 per cent in December, weaker than forecasts calling for a decline of 0.5 per cent.
Asian markets were mostly lower, with the Hong Kong market hit particularly hard, suffering its worst tumble this year. In addition to concerns over the European debt crisis, investors often take profits this time of year in the run-up to the Chinese New Year.
Here in North America, a big focus will continue to be on earnings reports. More than 20 stocks in the S&P 500 index will be reporting quarterly results today, including Canadian firms such as Suncor Energy Inc.
Now, here's a look at what else is going on this morning:
MARKETS:
Equities:
U.S. futures: S&P 500 +0.5 per cent; Dow +0.5 per cent at 13,888; Nasdaq +0.4 per cent
Hong Kong's Hang Seng index -2.26 per cent
Shanghai composite index +0.20 per cent
Japan's Nikkei -0.82 per cent
London's FTSE 100 +0.18 per cent
Germany's DAX +0.23 per cent
France's CAC 40 -1.04 per cent
Commodities:
WTI (Nymex Mar) +0.91 per cent at $97.04 (U.S.) a barrel
Gold (Comex Apr) +0.27 per cent at $1,681.00 (U.S.) an ounce
Copper (Comex Mar) +0.28 per cent at $3.78 (U.S.) a pound
Currencies:
Canadian dollar up 0.0013, or 0.13 per cent, at $1.0021 (U.S.)
ECONOMIC INDICATORS TO WATCH:
(10 a.m. ET) The U.S. Institute for Supply Management issues its non-manufacturing index for January. Economists expect a reading of 55.
STOCKS TO WATCH:
Research In Motion Ltd. shares will be in the spotlight again after a 15 per cent rally on Monday amid an analyst upgrade and bargain hunting after last week's big dip. Shares are up about 3 per cent in the U.S. premarket.
The two bidders vying to take over Primaris Retail Real Estate Investment Trust have struck a deal to team up. The new offer will see H&R Real Estate Investment Trust buy Primaris's operating platform as well as 25 of its shopping centres, while the consortium led by KingSett Capital will pick up 18 properties.
Yum Brands Inc. should open down after the Taco Bell parent late Monday reported a 5 per cent fall in quarterly profit that slightly beat analysts' estimates.
BP PLC reported lower quarterly profit that still beat expectations because of one-off taxes. Shares rose about 2 per cent overseas.
Baidu Inc. shares are down 7 per cent in the premarket despite reporting late Monday a 36 per cent jump in fourth-quarter revenue growth.
Media reports suggest Dell Inc's board had planned to meet Monday evening to vote on an offer to take the company private in a deal that values the company at $13.50 to $13.75. Dell shares are trading up 0.4 per cent at $13.33 in the premarket.
MasterCard Inc. doubled its quarterly cash dividend and said it would buy back up to $2-billion of its Class A shares.
Other earnings today include: Archer Daniels Midland Co.; Bell Aliant Inc.; CME Group Inc.; Genworth MI Canada Inc.; Indigo Books and Music Inc.; Kellogg Co.; Mazda Motor Corp.; NYSE Euronext Inc.; Suncor Energy Inc.; Toyota Motor Corp.; Walt Disney Co.
THIS MORNING'S TOP INVESTING READS ON THE WEB:
The favourite tech giant among the top performing advisers in the U.S.? It isn't Google nor Apple.
Is the secular bear market coming to an end?
The rising bubble in bond-bubble chatter.
Commodity prices may play catch up to the rally in equities.
Canadian stocks are looking quite cheap next to the U.S., Goldman Sachs points out as it provides a cyclically adjusted price/earnings chart for 17 countries.
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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