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.
World markets have been eerily quiet overnight as though traders are standing on a precipice trying to figure out which way to leap.
U.S. markets are trading up 0.15 per cent, making back yesterday's late decline. The FTSE and Dax are down 0.1 per cent, while the CAD and IBEX are down 0.3 per cent. Currencies are mixed with the Euro and greenback up slightly, while gold, Japanese yen, British pound and Canadian dollar are down slightly. In commodities, crude oil is up 0.6 per cent while copper is down 0.5 per cent.
Mixed markets may be a reflection of mixed news flow and traders awaiting bigger developments. Flash manufacturing and service PMI reports for Germany, France and Japan all came in better than expected and indicate the world economy has continued to accelerate so far in March. On the other hand, the ECB said talk of exiting stimulus was premature and the Bank of Japan confirmed its commitment to ongoing monetary support for Japan's economy.
The big news everyone appears to be waiting for is the U.S. House of Representatives vote on health care reform. Rejecting offers to continue negotiating through the weekend, last night president Donald Trump declared negotiations on the bill are over and demanded the house vote on the bill today. It remains unclear if the Republicans have enough votes within their own caucus to pass the bill with Democrats set to unanimously reject it.
With markets having rallied so much in recent months on anticipation that Republican control of Congress would mean a smooth and speedy reform process, today's vote represents a big test of market assumptions. A defeat could be seen as a big setback, but it could also open the door for the administration to move on to tax reform. If the bill does pass, it would go off to the Senate next week for more negotiations there. Either way, it's becoming clear that the political process is not as speedy or as simple as many on the Street have been thinking, and it seems only a matter of time before the instant is not fast enough speed of markets and the glacial speed of government collide. Titanic; meet iceberg.
On the other hand, it appears that the wheels of government are turning away in the background. Today the U.S. has issued a Presidential Permit to TransCanada approving construction of the Keystone XL pipeline after years of delay and rejection under the Obama Administration.
This weekend brings an EU Summit to celebrate the 60th anniversary of the EU with the union finding itself at a crossroad. Britain is set to trigger Article 50 to begin Brexit negotiations next Wednesday with the initial EU response expected within two days or by next Friday. Despite the recent setback in the Netherlands, Euroskeptic and populist movements are attracting a lot of support in countries across the union. German officials have been speaking today suggesting they don't expect other countries to follow the UK out the door (what else are they going to say really?) and appear to be laying the groundwork for a multi-speed Europe. Over the weekend, expect to see a lot more comments about the health and future of the EU, next week we'll see more on what the markets think of the rhetoric.
This morning, the U.S. Commerce Department reported durable goods orders rose more than expected in February. Bookings for goods meant to last at least three years rose 1.7 per cent after a 2.3-per-cent advance the prior month that was larger than previously estimated, Commerce Department data showed Friday. The Street was calling for a 1.4-per-cent increase.
MARKET DATA:
Futures (as of about 7:30 a.m. ET)
Dow +0.23 per cent; S&P 500 +0.17 per cent; Nasdaq: +0.22 per cent; TSX 60 +0.08 per cent
Equities
Japan's Nikkei +0.93 per cent
Shanghai composite index +0.64 per cent
Hong Kong's Hang Seng +0.13 per cent
Germany's DAX -0.16 per cent
London's FTSE -0.06 per cent
France's CAC 40 -0.417 per cent
Commodities
WTI crude oil (Nymex April) +0.55 per cent at $47.95 (U.S.) a barrel
Gold (Comex April) -0.24 per cent at $1,244.20 (U.S.) an ounce
Copper (Comex May) -0.25 per cent at $2.638 (U.S.) a pound
Currencies
Canadian dollar -0.024 at 74.88 cents (U.S.)
U.S. dollar index -0.07 per cent at 99.70
Bonds
Canada 10-year bond yield +0.02 at 1.68 per cent
KEY ECONOMIC RELEASES
Manufacturing Purchasing Managers' Indexes are released across the globe, including in the U.S. France also releases fourth-quarter GDP numbers.
(830 a.m. ET) Canada consumer price index for February. The Street expects a rise of 2.4 per cent year over year.
(830 a.m. ET) U.S. durable goods orders for February. Consensus is for a rise of 1.0 per cent from a month earlier.
KEY STOCKS TO WATCH
Earnings include: Aura Minerals Inc., BRP Inc., K-Bro Linen Inc., and Power Corporation of Canada.
Also see: Friday's small-cap stocks to watch
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TransCanada Corp. said on Friday the U.S. Department of State issued a presidential permit for the construction of the Keystone XL pipeline linking Canadian oil sands to U.S. refiners, a project blocked by former President Barack Obama. President Donald Trump signed an executive order to advance the project soon after taking office in January, saying it would create thousands of jobs.
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Twitter Inc. was up 1.1 per cent at $15.10 in premarket trading after the company said it is considering whether to build a premium version of its popular Tweetdeck interface aimed at professionals.
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Shares of Micron Technology jumped 11.9 per cent to $29.61 in premarket trading, a day after the chipmaker's current-quarter revenue and profit forecast beat expectations.
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The company that makes Ski-Doos, Sea-Doos and Spyders is reporting a stronger-than-expected fourth quarter. BRP Inc. of Valcourt, Que., had $136.6-million or $1.22 per share of net income in its fourth-quarter ended Jan. 31. That compares with a year-earlier loss of $28.7-million or 25 cents per share in the comparable period last year.
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With files from wire services
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