The Before the Bell report is constantly updated to reflect the latest news developments and market moves in the premarket. Check back later for updates.
U.S. and Canadian stock markets are poised to tumble at the open, as the stalemate in Washington over a new budget continues and uncertainly reigns over how the U.S. political parties will be able to reach agreement on raising the nation's debt limit in time to avoid default. Shares in BlackBerry Ltd., however, are rising sharply in the U.S. premarket amid a report of additional firms expressing buying interest in at least some parts of the company.
The Sunday morning political talk shows in the U.S. put on display just how entrenched the two sides are in their bargaining positions. House Speaker John Boehner, on ABC, said he would not introduce any bills to fully reopen the government or increase the country's borrowing limit unless the Democrats agree to broaden talks aimed at cutting the deficit. Mr. Boehner said the country could default if U.S. President Barack Obama doesn't negotiate. U.S. Treasury Secreatary Jack Lew, on NBC, spoke again of the dire consequences of not reaching a debt limit deal in time, warning of a "liquidity crisis" in homes, business and important institutions and commented that Congress was "playing with fire."
The U.S. will reach its debt limit on Oct. 17, although the Congressional Budget Office says it won't actually run out of funds until sometime between Oct. 22 and Oct. 31. As of right now, there are no meetings planned between the Republicans and the Democrats as the U.S. partial government shutdown is about to enter its second week.
Given that a failure to reach agreement on the debt limit in time would throw the global economy and financial markets in turmoil, most believe an agreement will eventually be reached. But the brinkmanship is creating a lot of concern and market volatility given that there's no clear path to a resolution, and some economists are already cutting their U.S. economic growth forecasts for this quarter because of the partial shutdown that has furloughed thousands of workers.
There are a couple of upsides though for those looking for a silver lining. The budgetary mess, which is delaying the release of some key U.S. economic data such as last Friday's jobs report, would seem to make it less likely that the Federal Reserve would start the tapering of its $85-billion a month in bond purchases anytime soon. And second, the selloff in stocks amid fears about reaching the debt limit means there could be an excellent buying opportunity to get back into the market once a deal is finally reached - assuming it gets done before an actual default.
Now, here's a closer look at what's going on this morning and what is to come.
MARKETS:
Equities:
Futures: S&P 500 -0.95 per cent; Dow -0.87 per cent; Nasdaq -0.87 per cent; S&P Toronto -0.71 per cent
Hong Kong's Hang Seng -0.71 per cent
Shanghai composite index +0.69 per cent
Japan's Nikkei -1.22 per cent
London's FTSE 100 -0.85 per cent
Germany's DAX -1.15 per cent
France's CAC 40 -1.04 per cent
Commodities:
WTI crude oil (Nymex Dec) -0.91 per cent at $102.59 (U.S.) a barrel
Gold (Comex Dec) +0.23 per cent at $1,312.90 (U.S.) an ounce
Copper (Comex Dec) -0.76 per cent at $3.28 (U.S.) a pound
Currencies:
Canadian dollar at 96.77 (U.S.), down 0.0002 from Friday's North American close.
U.S. dollar index down 0.13 at 79.99
Bonds:
U.S. 10-year Treasury yield 2.62 per cent, down 0.02
ECONOMIC INDICATORS TO WATCH:
Canada building permits in August fell 21.2 per cent from July, three times faster than economists had expected and the sharpest decline since April 2011.
STOCKS TO WATCH:
BlackBerry shares are up 4 per cent in the premarket after Reuters reported late Friday that the smartphone maker is in talks with Cisco Systems, Google, and SAP about selling them all or parts of itself. Meanwhile, an analyst with Veritas Investment says BlackBerry's stock price has fallen close to the company's liquidation value.
ANALYST ACTIONS:
Jefferies upgraded Apple to "buy" from "hold" and raised its price target to $600 (U.S.) from $425.
RBC upgraded Canadian National Rail to "outperform" from "sector perform" and raised its price target $120.
Morgan Stanley downgraded Alcoa to "equalweight" from "overweight" and cut its price target to $9 (U.S.) from $10.
Barclays downgraded IBM to "equalweight" from "overweight" and cut its price target to $190 (U.S.) from $215.
Raymond James initiated coverage on TransAlta Renewables Inc. with a "hold" rating and $10 (Canadian) price target.
Suntrust Robinson initiated coverage on Twitter with a "buy" rating and $50 (U.S.) price target.
Needham & Company raised its price target on Cree to $80 (U.S.) from $74 and reiterated a "buy" rating.
Goldman Sachs upgraded Lazard to "conviction buy" from "neutral" and set a $45 (U.S.) price target.
Canaccord Genuity upgraded Stantec Inc. to "buy" from "hold" and raised its price target to $58.50 (Canadian) from $50.
Canaccord Genuity raised its price target on Air Canada to $7 (Canadian) from $6.75 and maintained a "buy" rating.
Canaccord Genuity raised its price target on Black Diamond to $20 (U.S.) from $14 and reiterated a "buy" rating.
Canaccord Genuity initiated coverage on Castle Mountain Mining with a "speculative buy" rating and 50 cents price target.
National Bank Financial raised its price target on Sandvine Corp. to $3.50 (Canadian) from $2.50.
THIS MORNING'S TOP INVESTING READS ON THE WEB:
The secret edits Twitter made to its IPO filing, hoping investors wouldn't notice.
The most often repeated fact about U.S. debt is wrong.
It's time to ditch the Yale endowment model for investing.
The best (and the worst) beta strategies for your portfolio.
How Brazil's richest man has lost $34.5-billion.
Why Uncle Sam is hoarding gold.
Pity the poor investors who sold in May and went away. But here's the best ways to buy back in.
How Apple has changed since Steve Jobs.
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For instant headlines on breaking economic and corporate news in the premarket, follow Darcy Keith on Twitter at @eyeonequities.
Darcy Keith