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.
It's shaping up to be a tough day in markets, with both European stocks and North American equity futures decisively lower ahead of the opening bell.
Futures for the S&P 500 are down about 0.4 per cent, and for the TSX a more modest 0.2 per cent, as crude oil prices and gold see a minor lift in prices.
Investors are greeting revised growth forecasts out this morning from the World Bank with unease. It trimmed its global growth forecast to 2.8 per cent for this year, from its last prediction of 3.2 per cent in January, largely blaming Ukraine's unrest and slower economic trends in China and the U.S. The lowered forecast highlights the challenge corporate earnings growth faces on a global scale, at a time when many markets - especially the U.S. - appear priced for significant economic expansion.
Also spooking markets this morning is a profit warning from Deutsche Lufthansa AG that sent shares of the airline giant down 13 per cent in Europe, the most in five years. The airline cited the effect of strikes and the devaluation of the Venezuelan bolivar for the decline in its profit forecasts, although traders are also worried it may signal lower-than-expected demand for air seats at other global carriers. As such, U.S. airline stocks could come under pressure today.
The U.S. 10-year Treasury yield is sitting near a one-month high this morning and oil prices are edging up as commodity investors await the results of the latest OPEC meeting in Vienna. It is not expected to make any adjustments to its crude quotas.
As for the TSX, it's only about 170 points away from breaking its all-time record high. But it may take a while to get there, given a lack of near-term catalysts on the horizon to ignite significant buying interest. Also notable, as we pointed out Tuesday at Inside the Market, corporate inside selling has picked up significantly in recent weeks, led by the consumer and financial sector.
Watch for possible weakness in the Canadian real estate investment trust sector today, after multiple downgrades in the sector by Raymond James, which thinks valuations are looking a bit stretched after their strong performance this year. (More details below in our Analyst Actions section).
Now, here's a closer look at what's going on this morning and what is still to come.
MARKETS:
Equities:
Futures: S&P 500 -0.41 per cent; Dow -0.34 per cent; Nasdaq -0.38; S&P/TSX -0.16 per cent
Hong Kong's Hang Seng -0.25 per cent
Shanghai composite index +0.12 per cent
Japan's Nikkei +0.49 per cent
London's FTSE 100 -0.52 per cent
Germany's DAX -0.86 per cent
France's CAC 40 -0.76 per cent
Commodities:
WTI crude oil (Nymex Jly) +0.17 per cent at $104.53 (U.S.) a barrel
Gold (Comex Aug) +0.20 per cent at $1,262.60 (U.S.) an ounce
Copper (Comex Jly) -0.47 per cent at $3.04 (U.S.) a pound
Currencies:
Canadian dollar at 91.82 (U.S.), up 0.0011
U.S. dollar index down 0.02 at 80.79
Bonds:
U.S. 10-year Treasury yield 2.65 per cent, down 0.005
ECONOMIC INDICATORS:
No major reports scheduled.
STOCKS TO WATCH:
Earnings today include: H&R Block.
The founder of Lululemon, which is holding its annual shareholder meeting today in Vancouver, wants a shakeup among board members at the company he founded. Chip Wilson voted against the re-election of two board members, saying a change is needed to increase shareholder value.
Bloomberg reported that IBM Corp is nearing a deal to sell its chip-making business to contract chipmaker Globalfoundries Inc for an undisclosed amount.
The Wall Street Journal reported that regulators from the European Union will announce today a formal investigation into the tax affairs of Apple and Starbucks over concerns multinational companies are enjoying better tax breaks than allowed by EU law.
Bank of America Corp has reached an impasse in negotiating a multibillion-dollar settlement with the U.S. Department of Justice relating to the bank's mortgage investments, according to the New York Times.
ANALYST ACTIONS:
Raymond James downgraded several Canadian REITs, saying their strong year-to-date performance has left them trading at high valuations, especially given that higher interest rates are on the horizon. Calloway, Canadian Real Estate Investment Trust, and RioCan were all downgraded to "market perform" from "outperform" while Boardwalk and InterRent were downgraded to "outperform" from "strong buy."
M Partners downgraded Golden Queen Mining to "hold" from "buy" and cut its price target to $1.70 (Canadian) from $2.50.
RBC Dominion Securities downgraded Boeing to "sector perform" from "outperform" and kept a $145 (U.S.) price target, saying the stock is now fairly valued.
Goldman Sachs upgraded Amazon.com to "conviction buy" from "buy" but cut its price target to $400 (U.S.) from $430.
Merrill Lynch upgraded Reynolds American to "buy" from "neutral" and raised its price target to $65 (U.S.) from $63.
Merrill Lynch upgraded Molson Coors to "buy" from "underperform" and raised its price target to $80 (U.S.) from $55. Goldman Sachs also raised its target to $79 (U.S.) from $69 while maintaining a "buy" rating.
Canaccord Genuity downgraded BE Aerospace to "hold" from "buy" and cut its price target to $98 (U.S.) from $100.
Merrill Lynch upgraded Micron Technology to "buy" from "underperform" and raised its price target to $40 (U.S.) from $22.
Merrill Lynch upgraded SanDisk to "buy" from "underperform" and raised its price target to $125 (U.S.) from $80.
Nomura Securities upgraded Marvell to "buy" from "neutral" with a price target of $19 (U.S.).
Wunderlich Securities upgraded Angie's List to "buy" from "hold" with a price target of $15 (U.S.).
THIS MORNING'S TOP INVESTING LINKS:
Why is calling a market top so hard?
The VIX is not a great way to measure complacency.
Take market sentiment surveys with a grain of salt.
On the limitations of using valuation metrics.
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For instant headlines on breaking economic and corporate news in the premarket, follow Darcy Keith on Twitter at @eyeonequities.
Darcy Keith