Chinese stocks have been the big movers so far this Monday, soaring overnight to seven-month highs while most other Asian and European markets were rather subdued. U.S. stock futures, as well as commodities, are nearly unchanged, pointing to a rather flat TSX opening.
The rally in China was aided by a relatively positive earnings outlook for firms there, as well as the recent data showing positive economic momentum. In North America, gains in corporate profits are also lending support to the latest rally that has brought the S&P 500 to above 1,500 for the first time in five years. Some 76 per cent of the 147 companies that have released results so far in the index have beaten Street profit estimates, while 67 per cent have surpassed sales estimates, according to Bloomberg data. It's the third year of growth for U.S. corporate profits and the beat rate on sales has improved noticeably from the previous quarter.
But given that the S&P 500 has more than doubled from a 12-year low in 2009, and is only 5 per cent below an all-time high in October 2007, there is increasing chatter that the market could be overbought in the short term and may be vulnerable to a pullback - especially if U.S. budget talks lead to another stalemate later this year.
The U.S. released stronger-than-expected durable goods orders for December this morning, helping to give U.S. stock futures a slight boost. But traders will be more interested in seeing how the key U.S. non-farm payrolls report for January comes in on Friday morning. Also possibly key to this week's trading tone will be the Federal Reserve's first policy meeting of 2013, which wraps up on Wednesday. No policy changes are expected, but the Fed could provide some clues on how long its open-ended third round of quantitative easing may last as it reveals its latest readings on the economy.
In the meantime, it's continuing to get more expensive for Canadians to load up on U.S. stocks, with the loonie down by more than a third of a cent this morning to right around a penny below parity. The upside: for those who already hold U.S. stocks and aren't hedged to currency fluctuations, their portfolios are getting an extra boost.
Now, here's a closer look at what's going on this morning and what's to come:
U.S. futures: S&P 500 +0.1 per cent; Dow +0.1 per cent; Nasdaq +0.1 per cent
Hong Kong's Hang Seng index +0.39 per cent
Shanghai composite index +2.43 per cent
Japan's Nikkei -0.94 per cent
London's FTSE 100 +0.01 per cent
Germany's DAX -0.04 per cent
France's CAC 40 +0.05 per cent
WTI (Nymex Mar) +0.02 per cent at $95.90 (U.S.) a barrel
Gold (Comex Apr) -0.10 per cent at $1,657.20 (U.S.) an ounce
Copper (Comex Mar) -0.08 per cent at $3.65 (U.S.) a pound
Canadian dollar down 0.0040, or 0.41 per cent, at $0.9902 (U.S.)
ECONOMIC INDICATORS TO WATCH:
The U.S. Commerce Department said durable goods orders in December rose 4.6 per cent, beating economists' forecasts for a rise of 2 per cent.
STOCKS TO WATCH:
Caterpillar Inc. reported a profit of $1.04 (U.S.) a share, down from $2.32 a share a year earlier. Revenue decreased 6.8 per cent to $16.08-billion, just slightly below Street forecasts. The company's guidance for 2013 was within analysts' expectations. Shares are up 1 per cent in the premarket.
Other earnings today include Yahoo Inc. after the closing bell.
Apple Inc. will continue to be in the spotlight after last week's big tumble. So far in the premarket, shares are down 0.5 per cent.
Research In Motion Ltd. announced multiple music and video partners on Monday for its BlackBerry 10 storefront, ranging from Walt Disney Co's Walt Disney Studios and Sony Corp's Sony Pictures to Vivendi SA's Universal Music Group and Warner Music Group. Shares are up 1 per cent in the premarket.
Brookfield Renewable Energy Partners LP is raising its all-cash offer for Western Wind Energy Corp by 10 cents per share to $2.60 and giving shareholders until Feb. 11 to tender their stock.
THIS MORNING'S TOP INVESTING READS ON THE WEB:
The Apple stock chart has traced a head-and-shoulders topping pattern that sets a downside target at $340 (U.S.)
Both the U.S. and Canadian mints are rationing sales of silver bullion coins as demand outstrips supply. But it may not necessarily signal strong gains ahead for the silver market.
Why the S&P 500's break of 1,500 may not be such a bullish signal.
Jim Cramer thinks Procter & Gamble is poised to become the best stock in the Dow.
Nearly four years into a bull market, only now are investors beginning to put money back into equity mutual funds. History suggests that may signal the bull market is coming to an end.
Four reasons why the junk bond rally will continue in 2013.
The premarket report is constantly updated to reflect the latest news developments and market moves. For instant headlines on breaking economic and corporate news in the premarket, follow Darcy Keith on Twitter at @eyeonequities