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Inside the Market

Premarket: TSX set for strong gains as RIM soars on upgrade Add to ...

The rally on Wall Street late Wednesday is set to resume when markets open this morning, as optimism remains intact that the U.S. will be able to avoid the fiscal cliff.

U.S. index futures are solidly higher amid strong gains in most overseas markets. Commodities are also in firmer territory, especially crude oil, up 1.2 per cent.

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That suggests that the TSX is set for some good gains at the open, and it has another factor in its favour: shares in Research In Motion Ltd. this morning are soaring more than 10 per cent as Goldman Sachs upgraded the stock. The powerful U.S. investment bank now rates RIM as a "buy" and raised its price target to $16 from $9 (U.S.).

Comments from Speaker of the House John Boehner and President Barack Obama that they were hopeful that the government can avoid the nearly $600-billion in tax increases and spending cuts set to automatically take hold Jan. 1 has sparked the latest run of the bulls.

Negotiations are set to continue today, as U.S. Treasury Secretary Timothy Geithner is scheduled to meet with Senate Democratic Leader Harry Reid. The latest gyrations in the markets this week illustrate just how sensitive they are to every sign of progress, or lack there of, in the talks.

Overnight, there was some positive news out of Europe, where a business and consumer survey found that economic sentiment in the euro zone in November rose 1.4 points to 85.7. That beat forecasts and ended an eight-month run of falls.

U.S. stock index futures largely held onto their gains as a batch of U.S. economic reports were released at 0830 a.m. (ET). The Canadian dollar lost a bit of ground after data was released on this side of the border.

We detail those reports, and what else you need to know this morning, below.

MARKETS:

Equities:

U.S. futures: DJIA +0.5 per cent; S&P 500 +0.6 per cent; Nasdaq +0.7 per cent

Hong Kong's Hang Seng index +0.99 per cent

Shanghai composite index -0.53 per cent

Japan's Nikkei +1.00 per cent

London’s FTSE 100 +0.82 per cent

Germany’s DAX +0.76 per cent

France's CAC 40 +0.90 per cent

Commodities:

WTI (Nymex Jan) +1.21 per cent at $87.54 (U.S.) a barrel

Gold (Comex Feb) +0.44 per cent at $1,726.40 (U.S.) an ounce

Copper (Comex Mar) +0.83 per cent at $3.57 (U.S.) a pound

Currencies:

Canadian dollar up 0.0005, or 0.04 per cent, at 1.0076 (U.S.)

STOCKS AND ECONOMIC INDICATORS TO WATCH:

The U.S. revised its reading of third-quarter GDP to 2.7 per cent from an initial reading of 2 per cent. Economists, however, had expected a jump to 2.8 per cent.

U.S. initial jobless claims fell 23,000 to 393,000 last week, in line with estimates, as the impact from Hurricane Sandy wore off.

Statistics Canada said industrial prices fell 0.1 per cent in October from September, matching expectations. Raw material prices were flat; economists were expecting a drop of 0.7 per cent.

Statscan said the current account deficit in the third quarter was $18.91-billion, a little higher than the deficit of $18.38-billion in the second quarter and higher than the economist consensus of $18.7-billion.

(1000 a.m. ET) U.S. releases pending home sales index for October. Economists are looking for a rise of 1 per cent.

Research In Motion shares are up 12 per cent in the U.S. premarket after Goldman upgraded the stock to a "buy" and hiked its price target to $16. Goldman expects the BlackBerry 10 launch to be strong, and says the stock's risk/reward is becoming more favourable. Goldman expects RIM's quarterly results to exceed expectations over the next four quarters.

Royal Bank of Canada kicked off the bank earnings season with a 22 per cent boost in quarterly profits. With one-time items excluded, Royal Bank made $1.27 a share. Analysts were expecting $1.26 per share for the quarter on average.

Gildan Activewear Inc. said it booked net profit of $89-million (U.S.) or 73 cents per share, compared with profit of $48.5-million or 40 cents per share in the year-earlier period.

Tiffany shares are down 12 per cent in the premarket after it cut its 2012 guidance to $3.20-$3.40 from $3.55-3.70.

Target shares are down 3 per cent in the premarket after its same-store sales unexpectedly fell in November by 1 per cent. Analysts were expecting a 2.1 per cent increase.

Disney shares are up 1.5 per cent in the premarket after the media giant late Wednesday hiked its annual dividend by 25 per cent to 75 cents a share.

Other earnings out today include Barnes & Noble Inc. and Descartes Systems Group Inc.

THIS MORNING'S TOP INVESTING READS ON THE WEB:
Canada’s fast growing exchange traded funds market is on course for a record year in 2012 with analysts predicting that ETFs will continue to win market share from the country's traditional mutual funds industry.

Warren Buffett expects Washington lawmakers will come up with a compromise on the "fiscal cliff," but he's not sure that will happen by the end of the year.

Consumer confidence is a contrarian indicator: The market tends to do better following big drops in consumer confidence than after particularly big jumps.

Don’t get too down about Wednesday’s mildly disappointing U.S. new-home-sales report. The market with the most direct stake in those numbers – namely, lumber – is cheering them.                                       

In her first public interview since taking on the CEO gig at Yahoo, Marissa Mayer outlined her priorities both inside and out of the company.

Why the Yahoo stock rally may not last.

Four large-cap stocks that a substantial number of hedge funds sold out of during the third quarter of 2012.

What Amazon may do with its $3-billion in nearly free money.

The top ETF launches of 2012.

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For instant headlines on breaking economic and corporate news in the premarket, follow Darcy Keith on Twitter at @eyeonequities

Follow on Twitter: @eyeonequities

 

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