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.
North American trader return from a long weekend today to find the biggest action they missed to start the week has been in crude oil where West Texas Intermediate and Brent have been active up 1.0 per cent and down 0.7 per cent today respectively. The biggest news to come out of the G20 summit last weekend was that Saudi Arabia and Russia have agreed to greater co-operation between them.
What that actually means remains to be seen but oil traders have taken it as a sign of hope that some progress could be made toward greater co-operation among producers at the big Algeria conference later this month or the next OPEC meeting later this year. Iran, where production reportedly has returned to pre-sanction levels, apparently has indicated this morning that it could back a production freeze and that it is looking for oil to stabilize in the $50-60 (U.S.) range (to me $40-60 looks more realistic between seasonal swings and the potential a price above $50 could bring some U.S. production back on stream).
Stock markets are mixed today waiting to see how U.S. traders respond to weekend events and if there's any follow though reaction to Friday's nonfarm payrolls report. U.S. index futures are pretty much flat, while European indices are slightly split with the FTSE down 0.2 per cent and the Dax up 0.2 per cent.
Over the weekend, Richmond Fed President Jeffrey Lacker indicated he thinks interest rates should be significantly higher and that the current natural rate is about 1.5 per cent. He also noted that while job creation has been running at about 180,000 per month down from about 230,000 last year, this is still double the breakeven level. While he is not a voter this year, these comments indicate Fed hawks are not wavering following Friday's job report and that there's still a chance of a September rate hike.
The Canadian dollar is picking up ahead of Wednesday's Bank of Canada decision on a number of factors. As usual the loonie is benefiting from a rebound in the oil price. Also, The Reserve Bank of Australia held rates steady at Governor Glenn Stevens' final meeting taking away outside pressure to do something dovish. The Australian dollar is up overnight on the RBA news. The Bank of Canada looks unlikely to make a move anyway until it can properly assess the damage done by last spring's Fort McMurray wildfire but other resource producing countries have been cutting rates this summer. This all suggests the Bank of Canada is likely to remain on hold this meeting although a rate cut remains possible if the expected summer rebound doesn't materialize. The statement may give a better idea of where things are heading.
Now, here is a closer look at what's going on this morning and what is still to come.
Futures (as of about 7:30 a.m. ET)
Dow +0.06 per cent; S&P 500 +0.06 per cent; Nasdaq: +0.08 per cent; TSX 60 +0.06 per cent
Japan's Nikkei +0.26 per cent
Shanghai composite index +0.63 per cent
Hong Kong's Hang Seng +0.58 per cent
Germany's DAX +0.26 per cent
London's FTSE -0.25 per cent
France's CAC 40 +0.11 per cent
WTI crude oil (Nymex Oct.) +1.06 per cent at $44.92 (U.S.) a barrel
Gold (Comex Dec.) +0.72 per cent at $1,336.20 (U.S.) an ounce
Copper (Comex Dec.) +0.60 per cent at $2.09 (U.S.) a pound
Canadian dollar +0.21 at 77.51 cents (U.S.)
U.S. dollar index -0.23 at 95.61
Canada 10-year bond yield -0.9766 at 1.05 per cent
KEY ECONOMIC RELEASES
China foreign reserves
Euro area real GDP, retail PMI
Germany factory orders
(9:45 a.m. ET) U.S. PMI
(10 a.m. ET) U.S. Fed Reserve Labor Market Conditions Index for August. Consensus is 55.3, down from 55.5 in July.
KEY STOCKS TO WATCH
Canada's biggest pipeline company, Enbridge Inc., has struck an agreement to acquire Houston-based Spectra Energy Corp. in a $37-billion deal that will create North America's biggest energy infrastructure company. Enbridge U.S.-listed shares are down 1.8 per cent in the premarket.
Bombardier has slashed its 2016 C Series delivery forecast.
Wealth management firm Richardson GMP Ltd. is on the auction block with at least one major Canadian bank, Toronto-Dominion Bank, among the bidders, according to people familiar with the sale process.
Performance Sports Group Ltd. will be in the spotlight Tuesday after the stock had an unusual spike in the final hour of trading before the long weekend.
After seeing little activity for most of the day, PSG shares began to surge just after 3:10 p.m. on Friday. The stock jumped nearly 30 per cent in less than an hour, closing at $4.59 on the Toronto Stock Exchange.
It was the same story in the United States, with the shares rallying 30.4 per cent in the final hour to close at $3.56 (U.S.).
Earnings include: Caseys General Stores Inc.; Dave & Buster's Entertainment Inc.; Evertz Technologies Ltd.; Hudson's Bay Co.; Major Drilling Group International Inc.; Marvell Technology Group Ltd.
With files from wire services