The Before the Bell report is updated throughout the premarket to reflect the latest news developments and market moves. Check back later for updates.
Stock futures are pointing to a higher start to North American trading today, buoyed by a better-than-expected reading on growth in the Chinese economy and continued high expectations that the European Central Bank will announce a quantitative-easing type program this week. It's the first trading day of the week for Wall Street, where markets were closed Monday for the Martin Luther King Jr. day holiday.
Futures for the major U.S. and Canadian indexes are up roughly half a percentage point, with commodities mixed: copper and gold are rallying but crude oil is softer and trading just above the nearly six-year lows hit earlier this morning. The moves in commodities come after the International Monetary Fund today made the biggest cut to its global-growth outlook in three years.
The IMF forecast global growth of 3.5 per cent in 2015 – slightly higher than last year's modest 3.3-per-cent expansion, but down from 3.8 per cent in the IMF's previous outlook in October. It reduced its 2016 forecast by the same amount, to 3.7 per cent from October's 4 per cent. The IMF's growth forecast for Canada is now 2.3 per cent in 2015 and 2.1 per cent in 2016, down from its previous call of 2.4 per cent in both years. Canada's 2014 growth was estimated at 2.4 per cent.
The Shanghai composite index rose 1.8 per cent overnight as China reported that its gross domestic product grew 7.3 per cent in the fourth quarter of last year, beating forecasts by economists of 7.2 per cent. For the year as a whole, China GDP grew 7.4 per cent - still the slowest rate of economic expansion since 1990. The Shanghai index plunged 7.7 per cent on Monday, as investors were spooked by a tightening of margin-lending regulation.
ECB President Mario Draghi is widely expected to announce a bond-buying program likely exceeding 550 billion euros on Thursday after the central bank meets for a policy meeting. Markets have been pricing in that scenario for the past several sessions, so to prevent a selloff, the ECB's challenge may be to clearly signal that quantitative easing will continue until Europe is on a clear path to economic recovery.
Meanwhile, the fourth-quarter U.S. earnings seasons kicks into full gear today. We have highlights on some of the key earnings, and much more on what's going on this morning, below.
MARKETS:
Futures:
S&P 500 +0.51 per cent; Dow +0.42 per cent; Nasdaq +0.60 per cent; S&P/TSX +0.65 per cent
Equities:
Hong Kong's Hang Seng +0.90 per cent
Shanghai composite index +1.82 per cent
Japan's Nikkei +2.07 per cent
London's FTSE 100 +0.69 per cent
Germany's DAX +0.34 per cent
France's CAC 40 +1.28 per cent
Stoxx 600 +1.08 per cent
Commodities:
WTI crude oil (Nymex Mar) -1.93 per cent at $47.75 (U.S.) a barrel
Natural gas (Nymex Mar) -5.16 per cent at $2.96
Gold (Comex Feb) +1.68 per cent at $1,286.00 (U.S.) an ounce
Copper (Comex Mar) +1.49 per cent at $2.60 (U.S.) a pound
Currencies:
Canadian dollar at 83.27 (U.S.), down 0.0042
U.S. dollar index up 0.26 at 92.78
Bonds:
U.S. 10-year Treasury yield 1.82 per cent, down 0.01
ECONOMIC INDICATORS:
Statistics Canada says manufacturing sales fell 1.4 per cent in November to $51.5-billion — the third drop in four months. The result compared with a drop of 0.7 per cent that economists had expected.
(10 a.m. ET) U.S. NAHB housing market index.
STOCKS TO WATCH:
Morgan Stanley reported adjusted Q4 EPS of 40 cents (U.S.) versus the Street expectation of 56 cents. Shares in the bank are down 3 per cent in the premarket.
Johnson & Johnson reported Q4 EPS of $1.27, a penny above Street estimates. Shares are down 0.3 per cent in premarket trading.
Delta Air Lines reported Q4 EPS of 78 cents (U.S.) versus expectations of 77 cents. Shares are up 3 per cent in the premarket.
Halliburton reported Q4 EPS of $1.19 (U.S.) versus expectations of $1.10.
Other earnings today include: Celestica Inc., Advanced Micro Devices Inc., Baker Hughes Inc., IBM Corp., M&T Bank Corp., Netflix Inc., PetMed Express Inc., Pinnacle Fincl Partners Inc., SAP SE, Southwest Bancorp Inc., Super Micro Computer Inc., TD Ameritrade Holding Corp., Woodward Inc.
Mosaic projected fourth-quarter profit that topped analysts' estimates after margins for its two main crop nutrients exceeded its previous forecast. Earnings excluding one-time items are expected to be 83 cents to 88 cents a share. That beat the 57-cent average of 18 estimates compiled by Bloomberg.
ANALYST ACTIONS:
Merrill Lynch upgraded Teck Resources to "neutral" from "underperform" but lowered its price target to $13 (U.S.) from $19.
Goldman Sachs upgraded Bank of America to "conviction buy" from "buy" with a price target of $18 (U.S.).
JMP Securities downgraded Intel to "market underperform" from "market perform" with a price target of $30 (U.S.).
HSBC upgraded First Quantum Minerals to "overweight" from "neutral" with a price target of $18 (Canadian).
JMP Securities downgraded Intel to "market underperform" from "market perform" with a price target of $30 (U.S.).
Credit Suisse downgraded PulteGroup to "underperform" from "neutral" with a price target of $19 (U.S.).
THIS MORNING'S TOP INVESTMENT READS ON THE WEB:
Why India has big money-making potential in 2015.
Price collapse hits scavengers who scrape the bottom of Big Oil's barrel.
The global deflationary storm is abating.
Early January returns do not foreshadow the rest of the year.
What the Yale model can't teach you.
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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