U.S. stock futures have turned slightly negative after trending higher earlier this morning, suggesting Thursday's rally may not extend into today. Markets were initially encouraged by some better-than-expected economic data in Japan and Germany and an overall easing of concern that the Federal Reserve will soon put an end to its bond-buying program. But caution is settling in.
The TSX faces a familiar challenge: shares in Research In Motion Ltd. are set to plunge at the open after the BlackBerry maker reported weaker-than-expected first-quarter results, and projected an operating loss for the current quarter. Shares are down 24 per cent in the premarket.
Comments from Fed officials Thursday suggesting that investors have overreacted to the possibility of rate hikes and bond-buying tapering, as well as upbeat economic data, helped stocks to rally on Thursday - and some of that momentum is carrying into today. More Fed officials will be speaking today, and are likely to make a similar case.
Commodities are generally up, although gold isn't making much of a retracement of its losses this week, still hanging in near $1,200 (U.S.) an ounce. The U.S. Treasury yield continues to come off the boil. And overnight lending rates in China were slightly weaker today after their big spike about a week ago. Today, Chinese central bank Governor Zhou Xiaochuan made his first comments since the record cash squeeze, saying the nation will maintain market stability and adjust policies at the right time - soothing words for markets.
Japanese stocks rallied strongly overnight as the nation released industrial production figures for May that came in a greater-than-expected 2 per cent, accelerating from a 0.9 per cent gain in April. Retail sales for the month also gained, and housing starts rose a robust 14.5 per cent year-over-year, more than double forecasts. The housing reading may suggest Japanese citizens are betting inflation is on the horizon. Real estate is often used as a hedge against rising consumer prices.
Now, here's a closer look at what's going on this morning and what's to come.
MARKETS:
Equities:
Futures: S&P 500 -0.1 per cent; Dow -0.1 per cent; Nasdaq -0.1 per cent; TSX Toronto Unchanged
Hong Kong's Hang Seng +1.78 per cent
Shanghai composite index +1.49 per cent
Japan's Nikkei +3.51 per cent
London's FTSE 100 -0.09 per cent
Germany's DAX -0.22 per cent
France's CAC 40 -0.54 per cent
Commodities:
WTI crude oil (Nymex Aug) +0.24 per cent at $97.28 (U.S.) a barrel
Gold (Comex Aug) -0.74 per cent at $1,202.60 (U.S.) an ounce
Silver (Comex Sep) +1.39 per cent at $18.81 (U.S.) an ounce.
Copper (Comex Sep) +0.42 per cent at $3.07 (U.S.) a pound
Currencies:
Canadian dollar up 0.0003, or 0.03 per cent, at $0.9552 (U.S.)
U.S. dollar index up 0.03 at 82.93
Bonds:
U.S. 10-year Treasury yield 2.48 per cent, down 0.05
Canada 10-year government bond yield 2.41 per cent, down 0.08
ECONOMIC INDICATORS TO WATCH:
Statistics Canada said gross domestic product in April rose 1.4 per cent from a year ago, matching economists' expectations.
Statscan said the raw materials price index rose 0.2 per cent in May from April, below forecasts calling for a rise of 0.7 per cent. Industrial prices were flat, compared to forecasts calling for a 0.2 per cent increase.
(945 a.m ET) Chicago purchasing managers index for June is released, forecast to come in at 55.0 per cent from 58.7 per cent in May.
(955 a.m. ET) The Reuter's/University of Michigan consumer sentiment index for June is released, expected to hit 83.0 from a preliminary reading of 82.7.
STOCKS TO WATCH:
RIM shares are down 24 per cent in the premarket after reporting weaker-than-expected earnings and projecting losses for the current quarter. For the first quarter ended June 1, RIM posted an adjusted loss of 13 cents per share, whereas analysts were looking for earnings of 4 cents a share. BlackBerry 10 shipments in the quarter were below many analysts' estimates.
Canada's media sector will be in the spotlight after the CRTC gave Bell Media, a division of BCE, the green light after markets closed on Thursday to acquire Astral Media. The decision was largely expected given that Bell had to make concessions following an earlier rejection from the regulator.
Shaw Communications reported third-quarter earnings per share of 52 cents, down 1 cent from a year earlier, on revenues of $1.33-billion.
Nike Inc. shares are down nearly 2 per cent in the premarket after the company topped Wall Street estimates for its fiscal fourth-quarter earnings late on Thursday - but said it expects lower revenue out of China in the first half of the new fiscal year.
THIS MORNING'S TOP INVESTING READS ON THE WEB:
There is no top candidate at the moment in the process of picking a new Federal Reserve chairman.
The head of Goldman Sachs says the markets' big selloff was an overreaction to news the Federal Reserve may slow its bond purchases later this year.
Jim Cramer thinks everyone should own Boeing in their portfolio.
U.S. equities have masked a tough year for investors.
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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. You can also be notified using our dashboard feature when new articles appear from this author. Read more on using this feature here.
Darcy Keith