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 are mixed to finish the week. U.S. index futures are down 0.1 per cent to 0.2 per cent, failing to continue their post-Fed rally while European indices have faded into the weekend with the FTSE and Dax down 0.5 per cent or less. Overnight economic news was generally positive with flash manufacturing PMI reports for Japan, Germany and France all improving with the U.S. report due later this morning.
The loonie and Canadian stocks have the potential to be particularly active today with market moving news and speculation coming from two directions.
First, the state of the Canadian economy could influence trading early. Unlike most other resource-country central banks, the Bank of Canada has not cut interest rates this year in response to lower commodity prices, its last cut having come in July, 2015. Governor Stephen Poloz prefers to let the Canadian dollar do the heavy lifting instead. The Bank of Canada has been hoping the economy would bounce back from the Alberta forest fire disruptions earlier this year but indicated at its last meeting that July was not as strong as hoped. Friday's Canadian retail sales and inflation figures may give a better idea of how the Canadian economy is doing and whether the Bank of Canada may come under pressure to cut rates later this year or not.
Canada's annual inflation rate in August dipped to a 10-month low of 1.1 per cent, the seventh consecutive month it has remained below the Bank of Canada's 2.0 per cent target, Statistics Canada said on Friday. Analysts polled by Reuters had forecast the annual rate would edge up to 1.4 per cent from 1.3 per cent in July. The August rate was the lowest since the 1.0 per cent recorded in October, 2015. The loonie slipped slightly after the news was released, down 0.49 to 76.11 cents (U.S.).
We also could see action in oil prices impact trading in the Canadian dollar and energy stocks well into next week. Speculation continues to swirl around side discussions between OPEC and Russia at a big energy conference in Algeria this weekend.
Iran and Saudi Arabia have been working to iron out their differences which sunk the Qatar meeting in April. Apparently the Saudis have agreed to cut production in exchange for Iran freezing production. But what to do about Libya and Nigeria restoring depressed production may also be an issue. Apparently OPEC is ready to call a special meeting to ratify any agreement that may come out of these informal talks.
Today, initially oil was up but then West Texas Intermediate slid 0.09 per cent while Brent gained 0.37 per cent as traders take positions ahead of the meeting. Expectations of success have grown in recent days even though the last attempt at a deal to end the market share price war ended in failure. Results of the meeting could spark significant action in oil to start next week. For today, the main oil-related news is U.S. drill activity this afternoon.
Now, here is a closer look at what's going on this morning and what is still to come.
Futures (as of about 8:30 a.m. ET)
Dow -0.12 per cent; S&P 500 -0.17 per cent; Nasdaq: -0.18 per cent; TSX 60 -0.01 per cent
Japan's Nikkei -0.32 per cent
Shanghai composite index -0.28 per cent
Hong Kong's Hang Seng -0.31 per cent
Germany's DAX -0.38 per cent
London's FTSE -0.23 per cent
France's CAC 40 -0.64 per cent
WTI crude oil (Nymex Nov.) -0.09 per cent at $46.28 (U.S.) a barrel
Gold (Comex Dec.) -0.23 per cent at $1,341.60 (U.S.) an ounce
Copper (Comex Dec.) -0.21 per cent at $2.19 (U.S.) a pound
Canadian dollar -0.49 at 76.11 cents (U.S.)
U.S. dollar index -0.01 at 95.44
Canada 10-year bond yield -1.08 at 1.09 per cent
KEY ECONOMIC RELEASES
Japan manufacturing PMI and all-industry activity index
Euro area PMI
(8:30 a.m. ET) Canada consumer price index for August. Consensus is an increase of 0.1 per cent from July and 1.4 per cent year over year. For core CPI, projections are increases of 0.3 per cent and 2.1 per cent, respectively.
(8:30 a.m. ET) Canada retail sales for July. Consensus is an increase of 0.2 per cent from June (0.5 per cent excluding automobiles).
(9:45 a.m. ET) U.S. Markit Manufacturing PMI for September
(1 p.m. ET) Baker-Hughes rig count
KEY STOCKS TO WATCH
SNC-Lavalin Group Inc. said on Thursday it has an agreement in principle for a joint venture with state-owned atomic-power and weapons company China National Nuclear Corp. and manufacturing conglomerate Shanghai Electric Group Co. Ltd. to design, market and build the Advanced Fuel Candu Reactor (AFCR).
A consortium including Brookfield Infrastructure said it agreed to buy a 90-per-cent stake in the operator of a natural gas transmission system in Brazil from Petróleo Brasileiro SA (Petrobras) for about $5.2-billion.
China's central bank said the National Bank Of Canada has been given approval to issue up to 5 billion yuan ($749.7-million) of yuan-denominated bonds in China's interbank bond market.
Twitter shares were down 4.2 per cent at $17.84 (U.S.) in premarket trading after RBC cut its rating on the stock to "underperform."
Yahoo was down 2.4 per cent at $43.05 (U.S.), a day after the company said at least 500 million of its accounts were hacked in 2014 in a theft that appeared to be the world's biggest known cyber breach.
Athletic footwear and apparel retailer Finish Line matched estimates with quarterly profit of 53 cents per share, with revenue above Street forecasts. Same-store sales rose 5.1 per cent, also a better performance than analysts were expecting. The stock was up 4 per cent in premarket trading.
Valvoline will debut Friday on the New York Stock Exchange after the automotive maintenance company saw its initial public offering price at $22 per share, within the expected range of $20 to $23 and raising about $660-million. Valvoline was spun off from chemical maker Ashland.
Wal-Mart was upgraded to "overweight" from "equal-weight" at Barclays.
Japanese antitrust regulators are reportedly considering possible antitrust action against Apple Inc. over its domination of the nation's smartphone sales. A Reuters report said Apple and others were hobbling smaller competitors by refusing to sell older surplus iPhone models to third party retailers.
Vanda Pharmaceuticals is considering strategic alternatives, according to Reuters, including a potential sale. Vanda specializes in treatments for central nervous system disorders.
RBC cut its rating on restaurant operator Yum Brands to "outperform" from "top pick," as it re-evaluates potential upside for the stock from current levels, but still considers it a good long term value.
Goldman Sachs added financial services provider Prudential Financial to its "conviction buy" list, saying Prudential's asset management, retirement, and life insurance businesses are poised to continue to drive double-digit growth at a time when the stock is undervalued.
Morgan Stanley initiated coverage on video game makers Activision Blizzard and Electronic Arts with "overweight" ratings, saying both are leading the industry's shift toward digital monetization and are engaging an increasing number of users.
See also: Friday's small-cap stocks to watch
With files from wire services, CNBC