North American markets look set for a higher opening after surprisingly strong jobs reports in both Canada and the U.S.
U.S. stock index futures, which earlier were trading a little to the downside, rallied immediately after the American non-farm payrolls report showed 146,000 new jobs last month. That was much better than economists' expectations for 85,000 new jobs. The unemployment rate fell to 7.7 per cent, the lowest in almost four years, compared to expectations for 7.9 per cent.
Economists were bracing for much less rosy jobs report on the assumption that Hurricane Sandy would have crippled businesses during the month. But there were few indications of this in the report. However, the U.S. Labor Department did revise previously released numbers, saying that employers added 49,000 fewer jobs in October and September than initially estimated.
S&P 500 and Dow futures are up about half a percentage point. European shares also reversed course on the U.S. jobs report and are now trading higher. Crude oil and copper also rose and gold moved lower as the U.S. dollar gained against major currencies.
The loonie also strengthened against the greenback, reacting to stronger-than-expected jobs data on this side of the border.
Global markets had been slightly lower prior to the jobs report, except for China. The Shanghai composite index rallied 1.61 per cent overnight, bringing this week's gains to 4.1 per cent. That's the biggest weekly advance for that index since October 2011.
China has released a series of economic reports in recent weeks that are indicating the economy is starting to pick up steam. There have also been signs that China's new leadership, under Xi Jinping, will take measures to avoid a bigger slowdown, including new public works spending.
This weekend brings more data out of China, and traders are hedging their bets the figures will continue to indicate an acceleration in growth. Industrial production is forecast to rise to 9.8 per cent from a year ago, with retail sales seen jumping 14.6 per cent, the strongest level since March.
There's clearly some bargain hunting going on as well. Chinese stocks significantly underperformed global markets last month and, at the start of this week, had been down about 10 per cent from the start of the year.
Elsewhere this morning, there was more discouraging news out of Europe, where Germany's Bundesbank slashed its outlook for economic growth. It now projects gross domestic product of just 0.4 per cent next year. Figures were released in Greece showing its economy shrank 6.9 per cent in the third quarter from a year earlier. While a dismal number, it was better than the 7.2-per-cent drop estimated in November.
The U.S. jobs report this morning is serving as a momentary distraction from the ongoing "fiscal cliff" negotiations. There continues to be little progress in those talks as the end-of-year deadline approaches.
Now, here's a look at what else investors need to know this morning.
MARKETS:
Equities:
U.S. futures: S&P 500 +0.4 per cent; DJIA +0.4 per cent; Nasdaq +0.5 per cent
Hong Kong's Hang Seng index -0.26 per cent
Shanghai composite index +1.61 per cent
Japan's Nikkei -0.19 per cent
London's FTSE 100 +0.16 per cent
Germany's DAX +0.22 per cent
France's CAC 40 +0.32 per cent
Commodities:
WTI (Nymex Jan) +0.48 per cent at $86.67 (U.S.) a barrel
Gold (Comex Feb) -0.61 per cent at $1,691.50 (U.S.) an ounce
Copper (Comex Mar) +0.55 per cent at $3.66 (U.S.) a pound
Currencies:
Canadian dollar up 0.0033, or 0.33 per cent, at 1.0114 (U.S.)
STOCKS AND ECONOMIC INDICATORS TO WATCH:
Statistics Canada said employment rose by a net 59,300 jobs in November, versus expectations for only 7,500 new jobs. The unemployment rate dipped to 7.2 per cent from October's 7.4 per cent. No change had been forecast.
The U.S. reported 146,000 new jobs in November, easily surpassing the consensus call for 85,000 new jobs. The unemployment rate fell to 7.7 per cent compared to expectations for 7.9 per cent.
(0955 a.m. ET) Reuter's/University of Michigan's consumer sentiment index is released. Economists expect a reading of 83.0.
Bank of Nova Scotia reported fourth-quarter adjusted profit of $1.21 a share, beating forecasts for $1.19 a share, as revenues rose 15 per cent. Shares are up nearly 1 per cent in the premarket.
Other earnings out today include Del Monte Foods Co.
Netflix said late Thursday that the staff of the U.S. Securities and Exchange Commission is recommending a civil action against the company and its CEO because of a posting on a social-media site. Investors are taking the news in stride, as shares in Netflix are up 1.6 per cent in the premarket.
THIS MORNING'S TOP INVESTING READS ON THE WEB:
Commodity markets have entered a "renaissance" phase where prices are unlikely to go much higher but still offer investment opportunities, analysts at Goldman Sachs say.
U.S. refining stocks have surged more than 70 per cent over the past six months and the rally isn't likely to be over yet.
Currency exchange traded funds are bombing.
Apple shares are nearing a death cross. But investors may not have to worry much.
Trouble is brewing in Asia for Apple.
From a seasonality perspective, it's time for small caps to shine.
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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