Colin Cieszynski
The Before the Bell report is compiled by editors of The Globe and Mail and is updated throughout the morning to reflect latest developments. Colin Cieszynski, Chartered Financial Analyst and Chartered Market Technician, is chief market strategist with CMC Markets.
Stock markets have started to turn back upward again. Rejecting a weak Asia Pacific session, European indexes are climbing today with the FTSE and Dax up 0.6 per cent. U.S. index futures are up 0.3 per cent this morning. Commodities are soft with WTI crude oil down 0.4 per cent and copper down 0.5 per cent.
The big story in trading today is an upturn in the U.S. dollar which has posted 0.5 per cent to 1.0 per cent gains against all the other major currencies following Fed comments. Overnight Philadelphia Fed President Patrick Harker, a voter this year, indicated that a March rate hike remains possible if the U.S. economy continues to perform well.
Speculation on a March rate hike could generate significant trading swings in the U.S. dollar and currency markets over the next month. A March increase would put the Fed on course for four hikes this year which is what the Street has been expecting. A pass in March would suggest three hikes (the Fed party line) or fewer this year.
Philadelphia has historically been one of the more hawkish regional banks. Thursday, the doves get a chance at rebuttal with Chicago's Charles Evans and St. Louis's James Bullard scheduled to speak. Fed speculation could keep currencies active through the week.
Today in North America, the focus is back on trade with trade balances for the U.S. and Canada. The Trump Administration could use the data to make more points about policy and perhaps air more grievances or threats.
This morning S&P put out a report saying that Germany hasn't deliberately devalued the euro. This looks like a smoke screen to me. Just being in the euro is a competitive devaluation for Germany. A standalone Deutschmark would likely be valued a lot higher. The struggles of Greece, Italy, Spain and others to compete against Germany on currency has been clear for years.
Canada building permits are also out this morning along with more Canadian PMI data and a number of earnings reports. WestJet is out already this morning, beating the Street by a wide margin. General Motors' earnings also beat with Street handily and its shares rose 1.44 per cent in premarket trading.
Now, here is a closer look at key market data, and corporate and economic news.
MARKET DATA:
Futures (as of about 7:30 a.m. ET)
Dow +0.32 per cent; S&P 500 +0.28 per cent; Nasdaq: +0.24 per cent; TSX 60 +0.35 per cent
Equities
Japan's Nikkei -0.35 per cent
Shanghai composite index -0.11 per cent
Hong Kong's Hang Seng -0.07 per cent
Germany's DAX +0.59 per cent
London's FTSE +0.63 per cent
France's CAC 40 +0.09 per cent
Commodities
WTI crude oil (Nymex March) -0.36 per cent at $52.82 (U.S.) a barrel
Gold (Comex April) +0.01 per cent at $1,232.20 (U.S.) an ounce
Copper (Comex March) -0.5 per cent at $2.64 (U.S.) a pound
Currencies
Canadian dollar -0.6 at 75.82 cents (U.S.)
U.S. dollar index +0.01 at 101.19
Bonds
Canada 10-year bond yield -0.10 at 1.71 per cent
KEY ECONOMIC RELEASES
Japan leading index
China foreign direct investment
Germany industrial production
(8:30 a.m. ET) Canada merchandise trade balance for December. Consensus is a surplus of $0.3-billion.
Canada posted a larger-than-expected trade surplus of $923-million in December on higher energy exports, Statistics Canada data showed on Tuesday. Statscan revised November's surplus up to $1.01-billion from an initial $526-million.
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(8:30 a.m. ET) Canada building permits for December. Estimate is a decline of 3.0 per cent from November.
The value of Canadian building permits dropped by 6.6 percent in December from November, data from Statistics Canada showed on Tuesday. Construction intentions were down for both the residential and non-residential sectors, led by weaker demand for commercial buildings and multi-family dwellings.
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(8:30 a.m. ET) U.S. goods and services trade deficit for December. Consensus is $45-billion, down $0.2-billion from November.
The U.S. trade deficit narrowed slightly in December, but the improvement wasn't enough to keep the deficit for the entire year from rising to the highest level since 2012. That should provide fuel for President Donald Trump's contention that America needs a tougher approach to trade. The deficit in December fell 3.2 per cent to $44.2 billion, the Commerce Department reported Tuesday. A gain in exports of commercial aircraft, heavy machinery and autos offset a rise in imports. For the whole year, the deficit rose 0.4 per cent to $502.3 billion, the highest annual imbalance since 2012. Trump has pledged to impose penalty tariffs on countries such as China and Mexico to force them to drop what he contends are unfair trade practices that have cost millions of American jobs.
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(10 a.m. ET) Canada Ivey Purchasing Managers' Index for January.
(10 a.m. ET) U.S. Jobs Openings & Labor Turnover Survey for December.
(3 p.m. ET) U.S. consumer credit for December. Consensus is an increase of $20-billion from No
KEY STOCKS TO WATCH
Also see: Tuesday's small-cap stocks to watch
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Shares of Biogen rose 1.03 percent to $267.65 in premarket trading after Citigroup upgraded the drugmaker's stocks to "buy" from "neutral".
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Centene was up 0.96 percent at $64.24 after the health insurer reported better-than-expected quarterly revenue and profit.
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Handbag maker Michael Kors dropped 6 percent to $38.80 following a full-year revenue forecast cut.
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Mosaic Co. reported a better-than-expected quarterly profit as it kept a tight leash on costs, and the company slashed its annual dividend as it expected only a "gradual" improvement from a prolonged slump in the fertilizer market. The company's shares were down 6.6 percent at $29.90 in light premarket trading on Tuesday.
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U.S. agricultural trader Archer Daniels Midland Co. reported a 41 percent drop in quarterly profit from a year earlier, when the company recorded one-time gains of nearly $400 million. Net earnings attributable to the company fell to $424 million, or 73 cents per share.
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The chief executive of Teva Pharmaceutical Industries has stepped down, leaving new management to overhaul the world's biggest maker of generic drugs and restore confidence after a series of missteps sent its shares plummeting. Teva, Israel's largest company, said CEO Erez Vigodman was departing immediately and would be replaced on an interim basis by Chairman Yitzhak Peterburg.
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Drug distributor Cardinal Health Inc. reported lower-than-expected quarterly revenue on Tuesday, hurt in part by pricing pressure for generic drugs, and cut its full-year adjusted earnings forecast for the second straight quarter.
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Earnings include: Akamai Technologies Inc.; Ametek Inc.; Aramark; Archer Daniels Midland Co.; Atmos Energy Corp.; BP PLC; Camden Property Trust; Cardinal Health Inc.; Centene Corp.; Fidelity National Information Services Inc.; General Motors Co.; Genworth MI Canada Inc.; Gilead Sciences Inc.; Heroux-Devtek Inc.; IntelliPharmaCeutics International Inc.; Intercontinental Exchange Inc.; Mondelez International Inc.; Mosaic Co.; National Oilwell Varco Inc.; O'Reilly Automotive Inc.; Pioneer Natural Resources Co.; Plains All American Pipeline LP; Regeneron Pharmaceuticals Inc.; S&P Global Inc.; Tucows Inc.; Universal Corp.; Walt Disney Co.; WestJet Airlines Ltd.; Yum China Holdings Inc.
With files from wire services