North American markets appear set to mount a comeback this morning, but the TSX - as has been the case the last two days - may underperform given further mild weakness in major commodities.
S&P 500 stock futures are up 0.2 per cent, trimming some of their earlier advances but still pointing to some decent gains at the start. It should be enough to keep the TSX from sinking further, at least initially, after being slammed Wednesday amid a flare up in concerns about the U.S. economy.
Wednesday's hefty 259-point loss for the TSX, as well as a 1 per cent dip in the S&P 500 index and a slide in most major commodities, was ignited in part by disappointing data on ADP private payroll gains and a U.S. non-manufacturing index. But those reports rarely spark such a sharp market reaction, and suggest traders' nervousness over how much longer this year's powerful rally in U.S. stocks can continue may be more to blame.
It also suggests that two more reports on the U.S. labour market - today's weekly jobless claims, and most importantly, Friday's nonfarm payrolls report - will be under the microscope even more than usual. The jobless claims data today was disappointing, with more Americans filing for benefits than economists had anticipated. U.S. stock futures trimmed some of their gains on the news.
Just how much longer the Federal Reserve's quantitative easing measures will last is also going to increasingly come up for debate after San Francisco Fed President John Williams caught the market off guard Wednesday by saying that the central bank could begin curtailing its $85-billion-a-month asset buying program by this summer if the labour market continues to show improvement.
It was one of the clearest dates put forward so far on when the Fed's measures will come to an end, though investors are largely shrugging it off for now, perhaps waiting for more definitive words from chairman Ben Bernanke. On CNBC this morning, Atlanta Fed President Dennis Lockhard provided some more hints, suggesting that a few more months of solid economic data and improved jobs figures will be needed before monetary policy can be tightened.
Japan overnight ramped up its own quantitative easing measures, with its central bank announcing a policy overhaul intended to double the money supply and achieve a 2 per cent inflation target. Such action was largely expected under the country's new political regime and central bank governor Haruhiko Kuroda, but still came somewhat as a relief, sending the Nikkei surging and the yen falling against the greenback.
There's lots of monetary policy action happening in Europe this morning as well. The Bank of England announced it is leaving its key interest rate, and asset-buying program, unchanged. The European Central Bank did the same, and its president, Mario Draghi, will hold a news conference later with insight on how the economy there is weathering.
Now, here's a closer look at what else is going on this morning and what's to come.
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 -0.14 per cent
Shanghai composite index -0.12 per cent
Japan's Nikkei +2.21 per cent
London’s FTSE 100 -0.02 per cent
Germany’s DAX +0.45 per cent
France's CAC 40 +0.88 per cent
Italy's FTSE MIB +1.40 per cent
WTI (Nymex May) -0.03 per cent at $94.42 (U.S.) a barrel
Gold (Comex Jun) -0.60 per cent at $1,544.20 (U.S.) an ounce
Copper (Comex May) -0.26 per cent at $3.32 (U.S.) a pound
Canadian dollar down 0.0004, or 0.04 per cent, at $0.9851 (U.S.)
ECONOMIC INDICATORS TO WATCH:
U.S. new jobless claims last week rose 28,000 to a four-month high of 385,000, higher than the 350,000 economists had forecast.
STOCKS TO WATCH:
Facebook Inc. today holds an event to show the world its "new home on Android." It's rumoured they may announce a deeper push into smartphones with a modified version of the Google software. Shares are up 0.7 per cent in the premarket.
Bank of America downgraded Microsoft to "neutral" from "buy," and cut its price target to $33 from $35, citing disappointment with sales of Windows 8. Shares are down 0.3 per cent.
Transat A.T. Inc. announced a revamp of its flights, which includes adding Boeing 737s to its fleet for the first time.
TD Bank’s holds annual general meeting. It will be its first public appearance by new CEO-designate Bharat Masrani.
Earnings today include Reitmans Canada Ltd.
THIS MORNING'S TOP INVESTING READS ON THE WEB:
Such things as the Home Equity Line of Credit points to a possible time bomb in the Canadian financial system.
A growing lineup of fundamental, contrarian, seasonal and technical indicators points to the growing likelihood of a big correction dead ahead.
Three Black Swans that are circling the markets.
Half of hedge funds think their competitors are cheating.
Some new U.S.-listed ETFs are giving investors unprecedented access to Nigeria, Mongolia and central Asia.
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