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.
The rapidly unfolding crisis in Iraq is continuing to spook market players across the globe this morning, with crude oil prices marching to fresh highs for the year and North American stock futures suggesting little appetite for equity risk as the drama unfolds in the Middle East.
Iraqi forces are trying to fight back against the rapid advance of Islamist militants who seized major cities in northern Iraq earlier this week, with the Shiite-led government struggling to retain control of Sunni-majority regions. U.S. president Barack Obama signalled he would consider military strikes in Iraq to prevent the rebellion from spreading further, a scenario which only heightened worries among traders about a spreading conflict and sent the Dow down to a triple-digit loss Thursday. Brent crude for July delivery soared to $114.69 (U.S.) per barrel in overseas trading, touching the highest level since September 2013.
While some global investors are betting the geopolitical-related dip in markets may be presenting a buying opportunity - similar to the market opportunities that arose during the modest sell-off at the height of the Ukraine-Russia conflict - others are concerned this could be the catalyst that sets the stage for the long-awaited correction. Iraq is the world's eighth-largest producer of oil and No. 2 among OPEC members behind Saudi Arabia, and a sustained spike in oil prices arising from concerns about significant supply disruptions from the country could derail the still-sluggish global economic recovery.
Nevertheless, global equity markets largely took the Iraq situation largely in stride Friday. In Asia, where most stock markets ended higher, there was a raft of May economic data out of China to digest. Retail sales rose 12.5 per cent from a year earlier, slightly beating expectations, while industrial output matched forecasts by rising 8.8 per cent on the year. Fixed asset investment also held no surprises by rising 17.2 per cent for the January-to-May period.
European stock markets are down this morning. Former Bank of Canada Governor Mark Carney is taking centre-stage in currency markets there after stating late Thursday that interest rates could rise sooner than investors expect. It was a surprisingly strong comment from the new Bank of England leader at a time when the European Central Bank is going all out in trying to get the economy moving. The sterling soared against the euro in response to Mr. Carney's remarks.
MARKETS:
Equities:
Futures: S&P 500 -0.15 per cent; Dow -0.14 per cent; Nasdaq -0.05; S&P/TSX -0.09 per cent
Hong Kong's Hang Seng +0.62 per cent
Shanghai composite index +0.94 per cent
Japan's Nikkei +0.83 per cent
London's FTSE 100 -1.08 per cent
Germany's DAX -0.92 per cent
France's CAC 40 -0.82 per cent
Commodities:
WTI crude oil (Nymex Jly) +0.49 per cent at $107.05 (U.S.) a barrel
Gold (Comex Aug) -1.10 per cent at $1,272.80 (U.S.) an ounce
Copper (Comex Jly) +0.35 per cent at $3.03 (U.S.) a pound
Currencies:
Canadian dollar at 92.09 (U.S.), down 0.0004
U.S. dollar index down 0.007 at 80.56
Bonds:
U.S. 10-year Treasury yield 2.60 per cent, down 0.004
ECONOMIC INDICATORS:
Canada manufacturing sales for April fell 0.1 per cent from March, much weaker than the consensus expectation for a rise of 0.8 per cent.
U.S. producer prices rose 2 per cent in May from a year earlier, below the consensus call for a 2.4 per cent rise.
(955 a.m. ET) University of Michigan consumer sentiment index for June. Consensus is for a rise to 83.0 from 81.9 in May.
STOCKS TO WATCH:
Amaya Gaming Group is buying privately held Oldford Group, the owner and operator of the PokerStars and Full Tilt Poker brands, in a $4.9-billion deal. It will make Amaya the biggest publicly traded online operator of casino games.
Priceline announced a friendly $2.6-billion deal to buy OpenTable. OpenTable shares surged 46 per cent on the news.
Centerra announced the receipt of Kumtor Mine plan approvals. It says production will continue uninterrupted.
Reuters is reporting that Canada's Talisman Energy is reviewing its Asian oil and gas portfolio, valued at about $4-billion, which could lead to a partial or full sale.
Airline stocks should continue to be under pressure today from the rise in crude oil prices. Air Canada fell nearly 10 per cent on Thursday.
Intel shares are up about 5 per cent in premarket trading after the chipmaking giant late Thursday raised its forecast for second-quarter income.
ANALYST ACTIONS:
Canaccord Genuity downgraded Lululemon Athletica to "hold" from "buy" and slashed its price target to $42 (U.S.) from $69 and JPMorgan downgraded its rating to "neutral" from "overweight" and cut its target to $42 from $56 and Baird cut its rating to "neutral" from "outperform" and lowered its price target to $44 from $60. This follows several other analysts significantly cutting their price targets on the stock Thursday after the company provided weaker-than-expected guidance. Shares are up slightly today in the premarket after plunging Thursday.
Canaccord Genuity cut its price target on Transat AT to $17.25 (Canadian) from $19.25 and reiterated a "buy" rating.
BMO Nesbitt Burns upgraded Alcoa to "market perform" from "underperform" and raised its price target to $14 (U.S.) from $10.
Roth Capital upgraded Intel to "buy" from "neutral" and raised its price target to $35 (U.S.) from $28. Jefferies raised its target to $40 from $35 and reiterated a "buy" rating. Merrill Lynch boosted its target to $34 from $30 and reiterated a "buy" rating. RBC Dominion Securities raised its target to $31 from $28 and maintained a "sector perform" rating.
Wells Fargo downgraded Marathon Oil to "market perform" from "outperform" and revised its price target to $38-41 (U.S.) from $38-42.
Credit Suisse upgraded Pinnacle Foods to "outperform" from "neutral" with a price target of $36 (U.S.).
THIS MORNING'S TOP INVESTING LINKS:
10 U.S. stocks that could benefit from the World Cup.
Carl Icahn's influence in the corporate world is greater than you think.
Investor sentiment has spiked to the highest level of 2014.
Will China avoid a severe housing market correction?
The problem with market timing.
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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