Overseas markets are mixed this morning, with U.S. stock index futures not far from unchanged, a reflection of the cautious tone among investors right now after January's unexpectedly strong rally.
U.S. trade data this morning did little to shake up markets. But an unexpectedly weak Canadian jobs report, as well as a big dive in housing starts last month, sent the loonie into a tailspin, immediately plunging on the data releases by about half a cent to below parity. It is now trading at 99.77 per (U.S.)
The Japanese market suffered losses of almost 2 per cent overnight, and for the week was down 0.3 per cent - its first negative return in 13 weeks. The Nikkei was under pressure today after a disappointing fourth-quarter report from Sony Corp, with shares skidding 10.1 per cent as the consumer electronics company announced its eighth straight quarterly loss.
But what really spooked investors there were comments from Japanese Finance Minister Taro Aso, who said that the pace of the yen's weakening has been too fast. The yen slumped 13 per cent since mid-November as traders bet on aggressive monetary stimulus measures from the country's new prime minister, Shinzo Abe. The yen rose as much as 1.6 per cent against the U.S. dollar overnight after Mr. Aso's comments, its biggest gain since March 2011. A weaker yen is key in providing the country's heavily export-oriented economy a boost.
Chinese stocks saw modest gains today after data for January showed the nation's consumer price index rising 2 per cent last month from a year earlier, less than the 2.5 per cent inflation bump seen in December. Trade data also showed exports climbing 25 per cent in January and imports rising 28.8 per cent, making for a trade surplus of $29.2-billion. The data beat economists' expectations and continued to indicate solid growth in the Chinese economy.
European stocks are modestly higher today after Germany reported that 2012 saw the nation's second highest trade surplus ever, a sign that Europe's largest economy is still strong despite the debt crisis in the euro zone.
Now, here's a closer look at what's going on this morning.
MARKETS:
Equities:
U.S. futures: S&P 500 +0.1 per cent; Dow +0.1 per cent; Nasdaq +0.4 per cent
Hong Kong's Hang Seng index +0.16 per cent
Shanghai composite index +0.56 per cent
Japan's Nikkei -1.80 per cent
London's FTSE 100 +0.49 per cent
Germany's DAX +0.37 per cent
France's CAC 40 +0.72 per cent
Commodities:
WTI (Nymex Mar) +0.24 per cent at $96.06 (U.S.) a barrel
Gold (Comex Apr) -0.16 per cent at $1,668.60 (U.S.) an ounce
Copper (Comex Mar) +0.55 per cent at $3.75 (U.S.) a pound
Currencies:
Canadian dollar down 0.0045, or 0.45 per cent, at $0.9977 (U.S.)
ECONOMIC INDICATORS TO WATCH:
Canada Mortgage and Housing Corp. said housing starts plummeted 18.5 per cent in January, much steeper than expected by economists. The number of starts sunk to 160,577 units during the month, down from 197,118.
Canada's trade deficit in December almost halved to $901-million (Canadian) from the previous month as imports dropped at a faster pace than exports. Economists had expected a deficit of $1.36-billion after a $1.67-billion shortfall in November.
Statistics Canada said 22,000 jobs were lost last month, instead of the 5,000 jobs gains economists had forecast. Most jobs lost were in the public sector. The unemployment rate dipped to 7 per cent from 7.1 per cent as more people started looking for work.
The US trade deficit shrank to $38.5 billion in December, as imports dropped sharply. The trade shortfall was well below the average analyst estimate of $45.4 billion. The report suggests the economy in the fourth quarter of last year may have been stronger than expected.
STOCKS TO WATCH:
LinkedIn Corp. shares are up 10 per cent in the premarket after the company reported late Thursday better-than-expected profit and revenues in its latest quarter.
Activision Blizzard Inc. shares are up 6 per cent in the premarket after the video game publisher reported earnings and revenues ahead of Street forecasts.
AOL Inc reported its best quarterly revenue growth in eight years because of strong search and third-party network advertising sales. It also announced a share buyback.
Heroux-Devtek Inc. reported a lower profit for the fourth quarter, following the sale of a large portion of its manufacturing operations last year.
Other earnings today include: Apollo Global Management LLC; Brookfield Infrastructure Partners LP; Louisiana-Pacific Corp.; Moody's Corp.; Telus Corp.; and Zenotech Laboratories Ltd.
THIS MORNING'S TOP INVESTING READS ON THE WEB:
With the Federal Reserve and now Bank of Japan printing massive amounts of money, billionaire investor Jim Rogers is shorting U.S. government debt.
What Apple is doing with all that cash - and why it's reluctant to share it with stockholders.
Commodities hedge funds surrendered at least 20 per cent of their assets last year after investors pulled out large sums following the sector's worst annual performance in more than a decade.
From the Canadian Couch Potato blog: Investor sentiment in Canada is changing too, Questrade offers free ETF trading, and Horizon removes currency hedging on its popular S&P 500 ETF.
When the market eventually—and inevitably—corrects, cyclical stocks just might be the best place to hide.
Natural gas prices could be in store for a tumble.
________
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
Darcy Keith