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Jennifer Dowty

Jennifer Dowty, Chartered Financial Analyst, writes exclusively for Globe Unlimited subscribers. The Before the Bell report is updated throughout the premarket to reflect latest developments.

Good Wednesday morning to you. So far, this week has been marked by rather minor moves in the overall equity markets; however, this morning, market momentum appears positive, with equity indexes set to open moderately higher. S&P futures are up 9 points, Dow futures are higher by 68 points and Nasdaq futures are up by 20 points. In Canada, S&P/TSX 60 Index futures are higher by 4 points.

There are a number of key U.S. earnings reports that investors are absorbing, including beats by Boeing and General Motors. And there's major U.S. M&A news as well in the tech sector, with Western Digital Corp. announcing a deal to buy memory chip maker SanDisk Corp. for about $19-billion, and Lam Research Corp. agreeing to buy semiconductor firm KLA-Tencor Corp. in a $10.6-billion deal.

In the U.S., of those companies reporting third-quarter earnings to date, 43 per cent have beaten sales estimates while 74 per cent have beaten earnings targets. Earnings are expected to fall 6.7 percent this quarter, according to data compiled by Bloomberg.

Overseas in the Pacific Rim, turbulence in Chinese equity markets resurfaced with a late session selloff. The Shanghai composite declined 3.1 per cent, while the Shenzhen composite tumbled 5.9 per cent. These market declines were not attributed to any specific economic or news announcement. In Hong Kong, the Hang Seng was closed for a public holiday. In Japan, the Nikkei 225 gained 1.9 per cent as more stimulus from the Bank of Japan is anticipated at its Oct. 30 policy meeting, after disappointing trade data was released. Exports in September were weaker than expected, increasing 0.6 per cent year-over-year, compared to 3.1 per cent last month and expectations of 3.8 per cent. Imports fell 11.1 per cent year-over-year, below the decline of 3.1 per cent reported last month but ahead of a 12 per cent decline anticipated by economists. Other major markets were relatively neutral. The Korean Kospi was up 0.2 per cent and the Australian S&P/ASX 200 also increased by 0.2 per cent.

Major European markets are higher. The London FTSE, France's CAC, and Germany's DAX are all up by under one percent as investors look to the European Central Bank (ECB) to see if further quantitative easing measures will be announced during the two-day monetary policy meeting, which starts today.

Among major corporate news in Europe was Credit Suisse. The company's CEO, Tidjane Thiam, announced plans to raise over 6 billion Swiss Francs through a private placement and rights offering, along with plans to cut costs by 3.5 billion Swiss Francs by the end of 2018, and make major management changes. These efforts are aimed at improving the company's profitability. Shares of Credit Suisse are down just under 2 per cent.

In other news, shares of Syngenta are up 6 per cent after CEO announced his resignation, fuelling speculating that Monsanto could come back to the table with a takeover offer for the company. The CFO, John Ramsey, will serve as the interim CEO.

On Tuesday, the S&P/TSX composite index rallied 84 points, or 0.6 per cent, with gold stocks such as Yamana Gold, Alamos Gold, and Centerra Gold leading the charge higher. Nine of the 10 top performing stocks in the index were gold stocks. The index gains on Tuesday were relatively on par with Monday's losses and places the TSX index relatively close to where it closed out last week.

On the commodity front, the price of  gold gained just over $5 (U.S.) on Tuesday, closing at $1,176. This morning, spot gold is off a dollar. The price of West Texas Intermediate oil futures remain stable in the mid $45 (U.S.) range. Later this morning at 10:30 a.m. (EST) the weekly inventory oil report will be released from the U.S. Energy Information Administration. Meanwhile, the price of natural gas futures are down over 4 cents to $2.43 (U.S.).

The Canadian dollar is stable at 76.9 cents per U.S. dollar.

Here is the bottom line for Canadian investors: The shaky earnings reporting season warrants caution in the markets. Investors continue to reward stocks with attractive dividends such as Extendicare, Cineplex, and Rogers Communications. As well, Canadian infrastructure stocks, WSP Global and Aecon Group, closed at 52-week highs on Tuesday, getting a lift with the Justin Trudeau election win, who is pledging to increase spending on infrastructure. High-quality stocks with a solid financial outlook should remain a focus for investors.

Now, here is a closer look at major markets, and corporate and economic news.



S&P 500 +0.5 per cent; Dow +0.4 per cent; Nasdaq: +0.4 per cent

Hong Kong's Hang Seng Closed for holiday
Shanghai composite index -3.05 per cent
Japan's Nikkei +1.91 per cent
London's FTSE 100 +0.41 per cent
Germany's DAX +0.91 per cent
France's CAC 40 +0.67 per cent
Stoxx 600 +0.37 per cent

WTI crude oil (Nymex Dec) -1.21 per cent at $45.73 (U.S.) a barrel
Gold (Comex Dec) -0.15 per cent at $1,175.70 (U.S.) an ounce
Copper (Comex Dec) -0.30 per cent at $2.36 (U.S.) a pound

Canadian dollar -0.09 at 76.92 cents (U.S.).
U.S. dollar index -0.050 at 94.86

U.S. 10-year Treasury yield 2.06 per cent, -0.01


(10 a.m. ET) The Bank of Canada makes its policy and monetary policy announcement. No change expected.

(11:15 a.m. ET) Bank of Canada Governor Stephen Poloz holds a press conference on the bank's policy announcement.


Ferrari shares are set to begin trading today on the New York Stock Exchange under the ticker RACE after the luxury car maker's initial public offering was priced at the top of expectations Tuesday.

Hard disk drive maker Western Digital Corp said it would buy memory chip maker SanDisk Corp for about $19 billion, the latest in a wave of consolidation in the chip-making industry. The cash-and-stock offer values SanDisk at $86.50 per share, or a total equity value of about $19 billion, using a five-day volume weighted average price ending on Oct. 20 of $79.60 per share of Western Digital stock. SanDisk's shares rose 6.4 percent to $80 in pre-market trading. Western Digital's shares were down 1.1 percent at $74.

KLA-Tencor Corp. jumped 19 percent in premarket trading after Lam Research Corp. agreed to acquire the company for $10.6 billion. Lam added 2 percent.

Boeing reported Q3 core EPS of $2.52 vs. the Street estimated $2.22. The airplane builder posted revenue of $25.85 billion in the period, also exceeding Street forecasts of $24.74 billion. It also raised its full-year guidance. Shares are up 3 per cent in the premarket.

General Motors reported Q3 adjusted EPS of $1.50 vs. Street estimates of $1.19. Its revenue matched Street estimates.

Coca-Cola reported Q3 EPS of 51 cents vs. the Street estimated 50 cents. But revenue was lower than expected.

Baker Hughes reported a Q3 adjusted loss of 5 cents (U.S.) a share vs estimated loss of 14 cents.

Abbott Laboratories, the largest maker of heart stents and adult nutritional beverages, reported third- quarter earnings that topped analysts' estimates as sales of its generic drugs rose in emerging markets. Profit excluding one-time items was 54 cents a share, compared with the 53-cent average of analysts' estimates compiled by Bloomberg. Revenue increased 1.4 percent to $5.2 billion. The company narrowed its 2015 adjusted earnings forecast to $2.14 to $2.16 a share, from $2.10 to $2.20.

Drugmaker Biogen Inc said it would cut 11 pct of its global workforce by the end of this year. Biogen also reported an 11 percent rise in quarterly revenue, driven by higher demand for its multiple sclerosis drug Tecfidera.

Shares of Yahoo were down 1.3 per cent after the Internet company's quarterly earnings and profit missed expectations.

Chipotle fell 8 per cent in the premarket after the burrito chain posted disappointing third-quarter results.

Other earnings include: Abbott Laboratories, American Express Co, Callaway Golf Co, Carlisle Companies Inc, Citrix Systems Inc, Clean Energy Fuels Corp, Credit Suisse Group AG, Daewoo International Corp, Datalink Corp, Deckers Outdoor Corp, eBay Inc, EMC Corp, Equifax Inc, Husky Energy Inc, Kimberly-Clark Corp, Kinder Morgan Inc, Knight Transportation Inc, ManpowerGroup Inc, Morningstar Inc, Mullen Group Ltd, Nielsen Holdings PLC, Owens Corning, Piper Jaffray Companies, Polaris Industries Inc, Raymond James Financial Inc, Robert Half International Inc, Rosetta Genomics Ltd, SanDisk Corp, Sensient Technologies Corp, SKY PLC, SLM Corp, Sonoco Products Co, SUPERVALU Inc, Texas Instruments Inc, Tower Semiconductor Ltd, Tractor Supply Co, Tupperware Brands Corp, Unisys Corp, United Rentals Inc, Westshore Terminals Investment Corp.


Canaccord Genuity upgraded Canadian Pacific Railway to "buy" from "hold" on a lower share price. But it also raised its price target to $225 (Canadian) from $215.

Canaccord Genuity downgraded Iamgold to "sell" from "hold" and maintained a price target of $2 (Canadian).

Canaccord Genuity upgraded Lake Shore Gold to "buy" from "hold" and raised its target to $1.35 (Canadian) from $1.25.


"Never cut a tree down in the wintertime. Never make a negative decision in the low time. Never make your most important decisions when you are in your worst moods. Be patient. The storm will pass. The spring will come." - Robert H. Schuller