U.S. and Canadian stock futures are nearly unchanged this morning as the U.S. released a couple snapshots on the labour market in the lead up to the important nonfarm payrolls report on Friday.
The U.S. reports on private payrolls and weekly jobless claims weren't far off expectations. Later today, data on factory orders and service-sector activity will be monitored for further clues on when the Federal Reserve will begin tapering its bond-buying program. Stronger-than-expected data may sway some market players into thinking the reduction of stimulus measures will begin later this month, instead of later this year or even beyond. At this point, there isn't a lot of consensus on a starting point.
There are already signs that traders are bracing for the end of quantitative easing measures this morning, as the 10-year Treasury yield has edged up to a 2-year high of 2.95 per cent. That surpasses levels of late August and suggests income-producing stocks today on the TSX, including real estate investment trusts, will be out of favour. It will also put pressure on fixed income markets.
The spotlight is shining brightly on Europe today. The Bank of England announced this morning that it has left interest rates unchanged at 0.5 per cent, and, as expected, left the size of its own bond-buying program unchanged. The European Central Bank also announced no changes to its monetary policy after recent economic data helped ease concerns of another slowdown.
Now, here's a closer look at what's going on this morning and what's to come.
MARKETS:
Equities:
Futures: S&P 500 +0.04 per cent; Dow +0.01 per cent; Nasdaq +0.13 per cent; S&P Toronto -0.08 per cent
Hong Kong's Hang Seng +1.22 per cent
Shanghai composite index -0.26 per cent
Japan's Nikkei +0.08 per cent
London's FTSE 100 +0.42 per cent
Germany's DAX +0.24 per cent
France's CAC 40 +0.29 per cent
Commodities:
WTI crude oil (Nymex Oct) +0.52 per cent at $107.79 (U.S.) a barrel
Gold (Comex Dec) +0.47 per cent at $1,396.40 (U.S.) an ounce
Copper (Comex Dec) +0.51 per cent at $3.26 (U.S.) a pound
Currencies:
Canadian dollar at 95.39 (U.S.), up 0.0012 versus yesterday's North American close.
U.S. dollar index up 0.01 at 82.18
Bonds:
U.S. 10-year Treasury yield 2.94 per cent, up 0.04
ECONOMIC INDICATORS TO WATCH:
U.S. ADP private payroll employment in August added 176,000 jobs, less than the 200,000 boost in July, but close to expectations.
U.S. initial jobless claims last week fell 9,000 to 323,000. Economists were looking for 330,000 new jobless claims.
(10 a.m. ET) U.S. releases factory orders for July, forecast to fall 3.4 per cent from June's rise of 1.5 per cent.
(10 a.m. ET) U.S. releases the ISM non-manufacturing index for August, forecast to fell to 55.0 from July's 56.0.
STOCKS TO WATCH:
BlackBerry Ltd. shares are up about 3 per cent in the premarket after the Wall Street Journal reported just prior to market close on Wednesday that the Canadian technology firm has already held preliminary discussions with potential bidders for all or parts of the company and that a sale could wrap up as early as November.
WestJet Airlines said its August load factor declined to 87.9 per cent from 88.9 per cent.
Louisiana-Pacific Corp. said it plans to buy Vancouver-based Ainsworth Lumber Co. Ltd. for $1.1-billion (U.S.), or $3.76 per share. Louisiana-Pacific shares are up about 8 per cent in the premarket.
Earnings today include: Nordion Inc.; Patheon Inc.; Gap Inc.; Smith & Wesson Holding Corp.; and Tecsys.
ANALYST ACTIONS:
Cormark downgraded BlackBerry Ltd. to "speculative buy" from "buy" with a price target of $13.50.
Canaccord Genuity downgraded Gluskin Sheff + Associates to "hold" from "buy" and cut its target to $21.50 from $23.50.
Canaccord Genuity raised its price target on Sprott Inc. to $3 from $2.75 and maintained a "hold" rating.
Canaccord Genuity has upgraded the energy sector to "overweight" from "neutral," believing that the window for oil prices to correct meaningfully has passed. It has said that oil fundamentals have improved faster than it expected.
Barclays downgraded Newmont Mining Corp. to "equalweight" from "overweight."
RBC Dominion Securities downgraded Lockheed Martin to "sector perform" from "outperform" and kept a $126 (U.S.) price target.
Morgan Stanley upgraded Groupon Inc. to "overweight" from "equalweight" and raised its price target to $14 from $11.
THIS MORNING'S TOP INVESTING READS ON THE WEB:
Financial advisers were remarkably complacent just before the financial collapse five years ago – if not downright upbeat.
Morgan Stanley is calling for big gains in the S&P 500 over the next 12 months.
China's stock market has quietly been performing very well of late.
Morningstar's ultimate stock pickers' top 10 buys and sells.
Why Nokia didn't sell its patents to Microsoft.
Don't overthink emerging markets.
A dozen investing lessons from Barry Ritholtz
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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