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.
The big swings of the last few days in stocks, commodities and currencies have subsided a bit overnight with recent market-moving developments like increased hawkishness at the Fed, renewed speculation about Brexit, Alcoa's poor start to the earnings season, more OPEC talks, and swings in U.S. election momentum having run their course for now.
Today finds many markets consolidating recent moves while traders await new developments or rumours to act upon. U.S. index futures are down 0.15 per cent while the FTSE is down 0.2 per cent but holding at 7,000. The Dax and WTI crude oil are both essentially flat. The greenback has slipped back slightly enabling the pound and resource currencies like gold and the Canadian dollar to rebound a bit. The pound has stopped the bleeding and has begun to bounce back from a major selloff after U.K. Prime Minister Theresa May agreed to allow Parliamentary to debate and vote on her Brexit negotiation plans.
There is still lots of potential news that could move the markets this week. First up is the minutes of the last Federal Open Market Committee meeting with traders looking for confirmation of the hawkish tone coming out of FOMC members since the meeting that has even seen some of the more dovish members predicting an interest rate increase later this year. Currently, the Street is pricing in a 70 per cent chance of a rate hike by December so a dovish surprise would likely have more impact than hawkish leanings.
Oil markets may also remain active with the potential for more OPEC and Russia speculation around side meetings at an oil conference in Turkey with American Petroleum Institute inventories due this afternoon and Department of Energy inventories on Thursday. Anything can happen with Brexit or U.S. election sentiment at any time, while earnings pick up again on Friday with three big banks -- JPMorgan, Citigroup and Wells Fargo -- all reporting.
With big market swings subsiding today we could see more emphasis on individual stocks and sectors. Smartphone producers and suppliers could attract more attention as the fallout from the Galaxy Note 7 termination continues with Samsung putting out a profit warning. Alcoa's disappointing results may continue to influence trading in miners, while Biotech stocks may remain active trading contrary to Hillary Clinton's election prospects due to her threats to go after the drug companies.
Now, here is a closer look at what's going on this morning and what is still to come.
MARKET DATA:
Futures (as of about 8:15 a.m. ET)
Dow -0.15 per cent; S&P 500 -0.14 per cent; Nasdaq: -0.19 per cent; TSX 60 +0.09 per cent
Equities
Japan's Nikkei -1.09 per cent
Shanghai composite index -0.20 per cent
Hong Kong's Hang Seng -0.60 per cent
Germany's DAX -0.23 per cent
London's FTSE -0.13 per cent
France's CAC 40 -0.18 per cent
Commodities
WTI crude oil (Nymex Nov.) +0.49 per cent at $50.04 (U.S.) a barrel
Gold (Comex Dec.) -0.02 per cent at $1,255.70 (U.S.) an ounce
Copper (Comex Dec.) 0.02 per cent at $2.19 (U.S.) a pound
Currencies
Canadian dollar +0.14 at 75.54 cents (U.S.)
U.S. dollar index +0.06 at 97.75
Bonds
Canada 10-year bond yield +1.61 at 1.21 per cent
KEY ECONOMIC RELEASES
Japan machine orders
China trade surplus
Euro Area industrial production
(10 a.m. ET) U.S. Job Openings & Labor Turnover Survey for August.
(2 p.m. ET) U.S. Federal Open Market Committee minutes from Sept. 20-21 meeting released.
KEY STOCKS TO WATCH
Also see: Wednesday's small-cap stocks to watch
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Samsung Electronics Co. slashed its quarterly profit estimate by a third on Wednesday, soaking up a $2.3-billion hit from ditching its flagship smartphone in what could be one of the costliest product safety failures in tech history. Quantifying the financial pain of Tuesday's move to scrap the Galaxy Note 7 smartphone after a global recall and weeks of mounting problems, the world's top smartphone maker said it expects its July-September operating profit was 5.2 trillion won ($4.7-billion), down from the 7.8 trillion won it estimated five days ago.
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Apple was up 0.6 percent after Mizuho raised the stock's price target. The iPhone maker's shares have risen for the past six days, gaining in part by rival Samsung's issues with its Galaxy Note 7 phones and its eventual profit warning on Wednesday.
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Barracuda Networks shares rose 10.2 percent to $25.70 in premarket trading after the computer security and storage firm's quarterly revenue beat analysts' estimates.
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Tool company Stanley Black & Decker Inc. is buying Newell Brands' tools division for $1.95-billion in cash. The unit includes the industrial cutting, hand tool and power tool accessory brands Irwin and Lenox. Newell Brands Inc. announced recently that it will be selling several divisions as part of a consolidation move. The move to sell businesses with annual sales of about $1.5-billion comes a year after the company bought Jarden Corp. for about $13-billion and Elmer's for $600-million. Stanley's shares were up 0.54 per cent in premarket trading.
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Sprint Corp., the No. 4 U.S. wireless carrier, said on Wednesday it planned to raise an initial $3.5-billion by mortgaging about 14 percent of its wireless airwaves. The company, majority owned by Japan's SoftBank Group , estimates the airwaves are worth about $16.4-billion. Sprint's shares were up 0.29 per cent in premarket trading.
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Cybersecurity firm Fortinet stock plunged more than 15 percent in the premarket trading after reporting poor preliminary third-quarter results. Fortinet said it sees adjusted quarterly profits between 15 cents and 16 cents per share, below a Reuters consensus estimate of 18 cents a share. The company also slashed its billings guidance for the quarter to a range of $343 million to $348 million from $372 million to $376 million.
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Ericsson's U.S.-listed shares dropped more than 15 per cent before the bell after the Sweden-based firm issued a profit warning. The firm said in a statement its third quarter results will be "significantly lower" than it previously expected, citing weak mobile broadband demand.
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Richard Anderson is stepping down from his role as Delta Air Lines' executive chairman. Anderson also served as Delta's CEO from 2007 to last May. Frank Blake, Home Depot's former CEO, has been named Delta's non-executive chairman.
Earnings include: Cepheid; CSX Corp.; DragonWave Inc.; EXFO Inc.; Neptune Technologies & Bioressources Inc.; Velan Inc.
With files from wire services