U.S. and Canadian stock futures are joining overseas equity markets this morning in tracking modestly higher, with investors breathing a sigh of relief that China's gross domestic product figures released overnight matched expectations instead of falling short.
The annual GDP reading of 7.5 per cent in the April to June period was slower than the 7.7 per cent growth rate of the first quarter. But ahead of the data, many saw downside risks given a report earlier this month showed an unexpected fall in exports.
If the S&P 500 ends higher today, it would be another record close. But economic data so far today isn't helping the index's push north; U.S. retail sales came in well below expectations for June, suggesting continued subdued growth in the world's largest economy.
But here in Canada, it's a blockbuster deal in the retail sector that will be grabbing the spotlight. Loblaw Cos. Ltd. has struck a deal to acquire Shoppers Drug Mart for $12.4-billion in cash and stock.
The deal, subject to approval by Shoppers and Loblaw shareholders, will see Loblaw buy Shoppers' outstanding common shares for $33.18 in cash, plus 0.5965 Loblaw common shares per each Shoppers Drug Mart common share.
Based on the closing share price for Loblaw shares on Friday, the total value is $61.54 per Shoppers Drug Mart share, representing a 29.4 per cent premium to the 20-day volume-weighted average price of Shoppers Drug Mart stock as of July 12.
Shoppers closed at $48.40 on Friday, so the stock could rise by more than 25 per cent at the open.
Now, here's a closer look at what's going on this morning and what's to come.
MARKETS:
Equities:
Futures: S&P 500 +0.14 per cent; Dow +0.15 per cent; Nasdaq +0.21 per cent; TSX Toronto +0.25 per cent
Hong Kong's Hang Seng +0.1 per cent
Shanghai composite index +0.9 per cent
Japan's Nikkei Closed for holiday
London's FTSE 100 +0.4 per cent
Germany's DAX +0.2 per cent
France's CAC 40 +0.5 per cent
Commodities:
WTI crude oil (Nymex Sep) -0.5 per cent at $104.93 (U.S.) a barrel
Gold (Comex Aug) -0.1 per cent at $1,276.30 (U.S.) an ounce
Copper (Comex Sep) -0.6 per cent at $3.14 (U.S.) a pound
Currencies:
Canadian dollar at 95.91 (U.S.), down 0.29 of a cent since Friday's North American close
U.S. dollar index up 0.25 at 83.24
Bonds:
U.S. 10-year Treasury yield 2.60 per cent, up 0.02
ECONOMIC INDICATORS TO WATCH:
U.S. retail sales for June rose 0.4 per cent, about half the gain economists were expecting. Excluding auto sales, they were flat, below the 0.6 per cent rise expected by economists.
The Canadian Real Estate Association said home sales in June were down 0.6 per cent from a year ago, but up 3.3 per cent from May. The national average sale price last month was up 4.8 per cent from a year ago.
(10 a.m. ET) U.S. releases business inventories for May. They are expected to hold steady from April.
STOCKS TO WATCH:
Loblaw Cos. Ltd. has struck a deal to acquire Shoppers Drug Mart for $12.4-billion in cash and stock. The deal implies Shoppers could rise by more than 25 per cent at the open.
Citigroup Inc. shares are up 2 per cent in the premarket after reporting quarterly profit of $1.25 a share, beating estimates of $1.18. Revenue of $20.5-billion also exceeded the Street view of $19.73-billion.
Stifel Financial Corp. upgraded its rating on Tiffany & Co. to "buy" from "hold, with a price target of $92 (U.S.).
Leap Wireless International Inc. shares are up 115 per cent after AT&T late Friday announced it has buying the company at an 88 per cent premium.
Boeing Co. may continue to see heavy volumes after two mishaps involving its new Dreamliners on Friday. Airlines over the weekend expressed confidence in the safety of the new air craft. Shares are up 1.6 per cent in the premarket.
THIS MORNING'S TOP INVESTING READS ON THE WEB:
Things are only getting worse for bond giant Pimco.
Portfolio tips on battling volatility.
How traders and economists view the world differently - and what it says about the bond market selloff.
Hedge funds are looking more and more like closet index funds.
The Nasdaq is doing very well without Apple's help.
In this era of computerized high-speed trading, data centres are now moving to Washington to get economic releases millisecond faster.
Three out of every four investors are expecting stocks to rally over the next six months - and that may not necessarily be a bad thing.
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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