The Before the Bell report is constantly updated to reflect the latest news developments and market moves in the premarket. Check back later for updates.
North American stock futures are higher this morning after a big drop in Japanese stocks overnight and a general unease in the market right now amid escalating tensions in Ukraine.
On the TSX, the most interesting trading action may be seen in individual stock names rather than the broader market, as several key Canadian companies have reported earnings, including Enbridge and Tim Hortons. We detail those below in our Stocks to Watch section.
More U.S. earnings are also out today for the first quarter, which has turned out quite positive overall. According to Thomson Reuters data through Tuesday morning, of 397 companies in the S&P 500 that have reported earnings, 67.5 per cent beat expectations, above the 63 per cent average since 1994 and 66 per cent beat rate for the past four quarters. Profits are now expected to rise 4.6 per cent this quarter, down from the 6.5 per cent growth rate estimated at the start of the year, but above the low of 0.6 per cent in mid-April.
The Nikkei index in Japan dove nearly 3 per cent and ended at its lowest level since April 15, as a stronger yen prompted a selloff among manufacturers. The Japanese market was also hurt by a 5 per cent decline in shares of SoftBank, which forecast an 8 per cent drop to operating profit for the current fiscal year.
Softbank is the largest stakeholder in Alibaba, the Chinese e-commerce giant that filed for its long-anticipated IPO in New York late Tuesday. The Alibaba listing could become the largest technology IPO of all time, and possibly the biggest U.S. IPO in history, with an estimated market cap of $245-billion. Initial estimates suggest an IPO price in more than $40 (U.S.).
Shares in Yahoo are being closely watched as an indication of how much investors are willing to pay up for Alibaba. It has a 22 per cent stake in the Chinese company. Yahoo's shares have had little reaction to the IPO filing, however; they are down about 0.2 per cent in premarket trading.
On the macroeconomic front, today's focus is on Washington, where Fed Chair Janet Yellen is speaking in front of the Joint Economic Committee. She'll likely stick to her hawkish tone, and may play down the unexpectedly strong U.S. employment report from last week, given it was accompanied by a big rise in the number of people giving up looking for work. Markets will be closely monitoring her words for clues on when interest rates may rise.
Meanwhile, the situation in Ukraine continues to look more and more like civil war. There are reports this morning that Ukrainian forces have attacked a checkpoint in the eastern port of Mariupol. That comes after reports earlier this week that four soldiers and about 30 pro-Russian separatists were killed in a May 5 clash. U.S. Secretary of State John Kerry said Tuesday that pro-Russian separatists' plans in Ukraine's Donetsk region to hold a May 11 referendum on secession were illegal and he's threatening further sanctions against Russia.
Now, here's a closer look at what's going on this morning and what's to come.
MARKETS:
Equities:
Futures: S&P 500 +0.21 per cent; Dow +0.25 per cent; Nasdaq +0.19 per cent; S&P Toronto +0.10 per cent
Hong Kong's Hang Seng -1.05 per cent
Shanghai composite index -0.89 per cent
Japan's Nikkei Closed -2.94 per cent
London's FTSE 100 -0.39 per cent
Germany's DAX -0.13 per cent
France's CAC 40 -0.11 per cent
Commodities:
WTI crude oil (Nymex Jun) +0.77 per cent at $100.27 (U.S.) a barrel
Gold (Comex Jun) +0.21 per cent at $1,311.30 (U.S.) an ounce
Copper (Comex Jly) -0.46 per cent at $3.04 (U.S.) a pound
Currencies:
Canadian dollar at 91.89 (U.S.), up 0.0009
U.S. dollar index up 0.02 at 79.11
Bonds:
U.S. 10-year Treasury yield 2.59 per cent, down 0.008
ECONOMIC INDICATORS:
Canada building permits for March fell 3 per cent from February. Consensus was for a gain of 3.5 per cent, after declining 11.6 per cent in February from January.
U.S. nonfarm productivity for the first quarter fell 1.7 per cent, versus expectations for a decline of 1.2 per cent.
(10 a.m. ET) Federal Reserve Chair Janet Yellen testifies on the economic outlook.
STOCKS TO WATCH:
Enbridge reported Q1 adjusted EPS of 60 cents versus 57 cents Street estimate.
Tim Hortons reported Q1 EPS 66 cents versus the Street estimate of 68 cents.
Torstar reported adjusted earnings of 14 cents (Canadian), matching Street views, although revenues modestly missed expectations.
Husky Energy reported adjusted earnings of 73 cents (Canadian), beating the Street consensus of 62 cents.
Intact Financial reported quarterly net income of $1.17 (Canadian) per share, down from $1.27 a year ago, missing Street expectations.
Canyon Services Group reported quarterly EPS of 18 cents, above the consensus of 11 cents.
Electronic Arts shares are up 17 per cent in premarket trading after the video game publisher posted quarterly profit and revenue that beat expectations late Tuesday.
Chesapeake Energy reported a per-share profit of 59 cents in its latest quarter, above the consensus view of 48 cents.
Walt Disney late Tuesday reported adjusted EPS of $1.11 versus the Street view of 96 cents. Shares are up about 1 per cent in the premarket.
Other earnings today include: Aecon Group; Avigilon; Brookfield Asset Management; Cott; Franco-Nevada; Great Canadian Gaming; Home Capital; Kinross Gold; Lake Share Gold; Linamar; Norsat; Talisman Energy; Trican Well Service; Trinidad Drilling; Western Forest; Allergan; AOL; Avis Budget Group; Devon Energy; Dynegy; Molson Coors Brewing; Molycorp; Tesla Motors; Twenty-First Century Fox; Zillow.
Encana said it is buying a slice of a major Texas oil play for $3.1-billion from Freeport-McMoRan.
Canadian Pacific Rail said CEO Hunter Harrison's contract has been extended by a year, to 2017.
ANALYST ACTIONS:
Raymond James downgraded Savanna Energy Services to "outperform" from "strong buy" and cut its price target to $10 (Canadian) from $11.
Canaccord Genuity downgraded Essential Energy Services to "hold" from "buy" and cuts target to $3.25 (Canadian) from $3.75.
Raymond James upgraded ZCL Composites to "outperform" from "market perform" and hiked its target to $7.50 (Canadian) from $6.75.
Desjardins Securities downgraded EnerCare to "hold" from "buy" but raised its price target to $11.50 (Canadian) from $11.25.
Canaccord Genuity downgraded Veresen to "hold" from "buy" and cut its target to $16.50 (Canadian) from $17.
BMO Nesbitt Burns hiked its target on Turquoise Hill Resources to $5.50 (Canadian) from $4.25 and affirmed an "outperform" rating.
BMO Nesbitt Burns downgraded Whole Foods Market to "market perform" and slashed its price target to $40 (U.S.) from $65. Cantor Fitzgerald downgraded the stock to "sell" from "hold" and cut its target to $38 from $48. Deutsche Bank downgraded the stock to "hold" from "buy" and cut its target to $40 (U.S.) from $60 and Sterne Agee downgraded it to "neutral" from "buy" and cut its target to $40 from $60.
SunTrust Robinson Humphrey downgraded eBay to "neutral" from "buy" and cut its price target to $58 (U.S.) from $62.
Jefferies upgraded FirstEnergy to "buy" from "hold" and raised its price target to $37 (U.S.) from $31.
Northland Capital Markets downgraded Groupon to "market perform" from "outperform" and cut its target to $7 (U.S.) from $12.
THIS MORNING'S TOP INVESTING LINKS:
Beware: The Alibaba IPO isn't really really selling Alibaba.
Hedge fund managers are getting a lot richer.
Should Berkshire Hathaway be broken up?
A look at an ETF that buys stock in companies that are buying back shares.
Seven tips for stock traders determined to defy the odds.
And here's ten surefire trading rules to make you rich (tongue in cheek, of course).
Small cap stocks are breaking down.
Darcy Keith