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 risk-on for equity markets today, as signals from policy makers in both China and Europe that they are serious about propping up sagging economic growth has sparked a fresh round of market optimism. Futures for the S&P 500 are up 0.8 per cent, setting the stage for yet another record breaking day on Wall Street, while the TSX heads for fresh two-month highs. The loonie, meanwhile, jumped more than half a cent on stronger-than-expected domestic inflation data, now trading above 89 cents (U.S.).
This morning's rally, which has inspired a greater than 1.5 per cent jump in the Stoxx 600 broad index of Europe equities, got under way when European Central Bank head Mario Draghi offered some surprisingly dovish words, saying the the ECB needs to accelerate inflation quickly and may broaden its asset-purchase program. Then came an unexpected cut in interest rates by the Bank of China, the first time it did so since July 2012. China's central bank also said it will provide liquidity support through multiple monetary policy tools when necessary.
Taken together, these actions have provided investors with reassurance that policy makers are reacting aggressively to the economic weakness that has left the U.S. as one of the few brights spots when it comes to the global economy.
China lowered its one-year deposit rate by 0.25 of a percentage point to 2.75 per cent and its one-year lending rate by 0.4 percentage points to 5.6 per cent. The ECB has already cut interest rates and purchased covered bonds to boost the size of its balance sheet to early-2012 levels. Today's comments from Mr. Draghi suggest large-scale buying of government bonds - perhaps a full-fledged quantitative easing program - is also on the table.
Copper and crude oil, which are particularly sensitive to end-user demand fluctuations in China, are both up sharply today. Crude futures are also seeing some buying interest ahead of the OPEC meeting next week in Vienna, for which the outcome is highly in question. A Bloomberg survey has found half of 20 analysts expecting OPEC to cut supply to stem the plunge in prices, while the other half expect no change. Rarely has there been such divergent views.
Now, here's a closer look at what's happening this morning and what is still to come.
MARKETS:
Futures:
S&P 500 +0.85 per cent; Dow +0.83 per cent; Nasdaq +0.82 per cent; S&P/TSX +0.62 per cent
Equities:
Hong Kong's Hang Seng +0.37 per cent
Shanghai composite index +1.40 per cent
Japan's Nikkei +0.33 per cent
London's FTSE 100 +0.94 per cent
Germany's DAX +1.91 per cent
France's CAC 40 +1.93 per cent
Stoxx 600 +1.69 per cent
Commodities:
WTI crude oil (Nymex Dec) +1.65 per cent at $77.10 (U.S.) a barrel
Natural gas (Nymex Jan) -2.65 per cent at $4.53 (U.S.)
Gold (Comex Dec) +0.17 per cent at $1,192.90 (U.S.) an ounce
Copper (Comex Mar) +1.49 per cent at $3.06 (U.S.) a pound
Currencies:
Canadian dollar at 89.23 (U.S.), up 0.0082
U.S. dollar index up 0.58 at 88.17
Bonds:
U.S. 10-year Treasury yield 2.35 per cent, up 0.01
ECONOMIC INDICATORS:
Canada's consumer price index for October rose 2.4 per cent from a year earlier, more than the 2 per cent rise economists on average were calling for.
STOCKS TO WATCH:
RBC plans to exit its international business in the Caribbean and certain other international private banking groups that have teams in Toronto, Montreal and the United States, according to the Financial Post. The newspaper said It could affect 300 employees.
The Wall Street Journal reported Wynn Resorts is being investigated by federal authorities over whether it broke money-laundering rules.
Gap shares will likely be under pressure after results late Thursday were below consensus forecasts and it provided a disappointing full-year outlook.
ANALYST ACTIONS:
Jennings Capital initiated coverage on Blackbird Energy with a "speculative buy" rating and 65 cents (Canadian) price target.
Raymond James upgraded DR Horton to "market perform" from "underperform."
Evercore downgraded eBay to "sell" from "hold" with a price target of $49 (U.S.).
THIS MORNING'S TOP INVESTING READS ON THE WEB:
Vanguard's ETFs and funds have had a very good year.
A big wave of defaults in the junk bond market may be on the way. But also read: Junk-bond banking boom peaks.
You'll learn more from your losing trades than your winners.
How the stock market performs before and after big drops and big rallies.
Earnings seasonality and stock returns.
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Have feedback on our daily Before the Bell report and suggestions on how to make it more useful in your investing day? Please contact Inside the Market Editor Darcy Keith at dakeith@globeandmail.com.
Darcy Keith