U.S. stock futures are pointing up this morning, but commodity prices are taking a bruising, a backdrop that should see the resource-heavy TSX underperform U.S. equities yet again.
Commodities, especially economically sensitive copper and other base metals, were sold off overnight after disappointing data out of China this weekend put the spotlight on slowing momentum in its economy. Exports in May posted the lowest growth in almost a year, while inflation, growth in bank lending and investment came in below expectations. Factory output and retail sales grew only about the same pace as in previous months.
Chinese and most other Asian markets were weak overnight given the lacklustre Chinese data, but not so in Tokyo, where the Nikkei rallied 4.71 per cent and the yen softened against the greenback. Traders there found some encouragement in data showing that Japan's gross domestic product expanded by an annualized 4.1 per cent in the first quarter, stronger than the previous estimate of 3.5 per cent.
There are no major economic reports from the U.S. to drive sentiment today, but there will be a speech later this morning from St. Louis Federal Reserve President James Bullard, a voting member of the Federal Reserve. It's the last scheduled speech from a Fed member before its interest-rate decision later this month.
Income-producing securities may be less attractive than the broader market again today, as U.S. and Canadian government bond yields hover near 52-week highs, making corporate dividend payouts less attractive in comparison.
U.S. stock futures gained a little further upward traction just ahead of the official market open, after Standard & Poor's raised the credit outlook for the United States to "stable" from "negative."
Now, here's the detailed rundown of markets this morning and what's to come.
MARKETS:
Equities:
Futures: S&P Toronto +0.08 per cent; S&P 500 +0.40 per cent; Dow +0.31 per cent; Nasdaq +0.37 per cent
Hong Kong's Hang Seng -1.02 per cent
Shanghai composite index -1.39 per cent
Japan's Nikkei +4.71 per cent
London's FTSE 100 +1.17 per cent
Germany's DAX +0.88 per cent
France's CAC 40 -0.04 per cent
Italy's FTSE MIB -0.20 per cent
Commodities:
WTI crude oil (Nymex July) -0.42 per cent at $95.61 (U.S.) a barrel
Gold (Comex Aug) -0.25 per cent at $1,379.50 (U.S.) an ounce
Copper (Comex July) -2.89 per cent at $3.22 (U.S.) a pound
Currencies:
Canadian dollar up 0.0067, or 0.69 per cent, at $0.9805 (U.S.)
Bonds:
U.S. 10-year Treasury yield 2.16 per cent, up 0.08
Canada 10-year government bond yield 2.15 per cent, up 0.11
ECONOMIC INDICATORS TO WATCH:
Canadian housing starts jumped to an annual pace of 200,178 in May, far surpassing the 175,000 estimate from economists.
STOCKS TO WATCH:
Earnings today include Lululemon Inc.
Texas Instruments Inc. expected to release financial update for its second quarter so far.
Apple kicks off its annual Worldwide Developer's Conference. It's expected to reveal its updated operating system software and possibly a new music-streaming service.
THIS MORNING'S TOP INVESTING READS ON THE WEB:
A good primer on where to put your money when long-term bond yields rise, as they are now, based on several historical studies.
Stock market returns by country so far in 2013. You'll see Canada doesn't have much in terms of bragging rights.
Investor sentiment is undergoing big changes.
Seven ways that stock buybacks often disappoint.
Is it crazy to be 100 per cent in stocks?
The latest stock picks of T. Boone Pickens.
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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