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.
Markets are still enthralled by bad economic news, under the impression that slow, disappointing activity points to further stimulus by the world's central banks: European stocks were modestly higher on Thursday morning, Japan's Nikkei 225 rose more than 2 per cent in overnight trading and U.S. futures pointed to a higher opening, despite some not-so-good developments.
The euro zone economy expanded by a mere 0.1 per cent in the third quarter, in line with economists' expectations buy down from 0.3 per cent growth in the second quarter. What's particularly worrisome is that the slowing pace of growth was largely driven by Europe's economic powerhouse, Germany.
Meanwhile, forecasts from two key U.S. companies also look dour. Wal-Mart Stores Inc. lowered its full-year earnings forecast to a range between $5.01 (U.S.) and $5.11, down from an earlier forecast that saw earnings as high as $5.30. The retailer blamed a sluggish economy and rising competition from dollar stores. As well, technology bellwether Cisco Systems Inc. said that its revenue will likely fall 8 to 10 per cent, marking a huge shift from expectations for growth of 4 per cent, amid slower corporate spending and a weak economy. (See more corporate developments below in our Stocks to Watch section.)
So why are investors pumped? Janet Yellen, the nominee for Federal Reserve chairman is expected to say today that ongoing economic stimulus should be maintained until the U.S. economy improves. That means so-called tapering, or scaling back on monthly bond purchases, could continue longer than many economists (or even the current Fed chairman, Ben Bernanke) had expected.
Now, here's a closer look at what's going on this morning and what's to come.
MARKETS:
Equities:
Futures: S&P 500 +0.18 per cent; Dow +0.16 per cent; Nasdaq +0.22 per cent; S&P Toronto +0.26 per cent
Hong Kong's Hang Seng +1.69 per cent
Shanghai composite index +1.69 per cent
Japan's Nikkei +1.95 per cent
London's FTSE 100 +0.36 per cent
Germany's DAX +0.21 per cent
France's CAC 40 +0.21 per cent
Commodities:
WTI crude oil (Nymex Jan) +0.03 per cent at $94.44 (U.S.) a barrel
Gold (Comex Dec) -0.36 per cent at $1,281.50 (U.S.) an ounce
Copper (Comex Dec) -0.28 per cent at $3.16 (U.S.) a pound
Currencies:
Canadian dollar at 95.57 (U.S.), vs. 95.53 at Thursday's North American close.
U.S. dollar index up 0.03 at 81.05
Bonds:
U.S. 10-year Treasury yield 2.72 per cent, +0.02
ECONOMIC INDICATORS TO WATCH:
Canada reported a September trade deficit of $435-million (Canadian), much smaller than consensus call of $1-billion. Exports rose 1.8 per cent to the highest since December 2011.
The U.S. trade deficit widened 8 per cent to $41.8-billion (U.S.), the largest since May and more than the Street consensus of $39.0-billion. Imports rose to their highest level in almost a year. August's shortfall on the trade balance was revised slightly to $38.7 billion from the previously reported $38.8 billion.
The U.S. reported initial jobless claims rose to 339,000 last week, up from 336,000 the previous week, and above the expectation for 330,000.
US non-farm productivity in the third quarter rose 1.9 per cent versus expectations for a 2.2 per cent rise.
STOCKS TO WATCH:
Royal Bank of Canada says it anticipates booking a charge of about $160-million in its insurance unit.
CGI Group reported adjusted EPS of 67 cents, beating the consensus view of 62 cents, but revenues fell a little shy of expectations.
Kinross Gold late Wednesday reported a third-quarter profit of 4 cents a share, a penny shy of the Street consensus, but it raised its gold production forecast. Shares are up 2.8 per cent in the premarket.
Partners REIT reported weaker-than-expected third-quafter results late Wednesday and said it will reduce its distribution to unit holders by 22 per cent. M Partners this morning placed its "buy" rating and $7.50 (Canadian) price target on the REIT under review.
Wal-Mart report third-quarter EPS of $1.14 a share, a penny higher than estimates. Overall revenue increased 1.6 per cent to $115.69-billion (U.S.), while Wall Street was expecting $116.8-billion. The company lowered its full-year earnings range forecast and shares are down 1.6 per cent in the premarket.
Cisco Systems shares are down 12 per cent in the premarket after late Wednesday reporting adjusted profit that was 2 cents better than the Street consensus but its quarterly revenues of $12.1-billion fell short of expectations of $12.35-billion and the company warned its revenues would dive as much as 10 per cent this quarter due to a backlash against U.S. government spying in emerging markets.
Kohl's shares are down nearly 10 per cent in the premarket as it lowered its guidance, forecasting fourth-quarter EPS at $1.59 to $1.74 per share with same-store sales falling 0 per cent to 2 per cent.
Other Canadian earnings today include: Leon's Furniture, Finning International, North American Palladium, Paladin Labs, Pan American Silver, Power Corp. Canada and Power Financial, Sprott, Twin Butte Energy, Rogers Sugar, Hanfeng Evergreen, Gabriel Resources, B2gold, Algonquin Power & Utilities.
Other U.S. earnings today include: Viacom, Nordstrom.
ANALYST ACTIONS:
Sterne Agree downgraded Lululemon Athletica to "underperform" from "neutral" and cut its price target to $56 (U.S.) from $75, commenting that the company's current valuation is not sustainable and the company is alienating its customers.
TD Securities downgraded CAE to "hold" from "buy" and cut its price target to $13 (U.S.) from $13.50.
Canaccord Genuity reiterated a "hold" rating and $6 (U.S.) price target on BlackBerry, but cut its fiscal 2014 smartphone sales estimates after a global handset survey led it to conclude the company will have only a 1.4 per cent market share of global smartphone sales this quarter, down from 4.2 per cent in the third quarter.
Canaccord Genuity downgraded MBAC Fertilizer to "speculative buy" from "buy" and cut its price target to $2.75 (Canadian) from $3.55.
Desjardins Securities cut its price target on Metro to $67 (Canadian) from $70 and maintained a "hold" rating.
Canaccord Genuity raised its price target on Linamar to $43 (Canadian) from $39 and maintained a "buy" rating.
Canaccord Genuity cut its price target on Thompson Creek Metals to $1.50 (Canadian) from $2.60 and kept a "sell" rating.
JPMorgan downgraded Penn West Energy to "neutral" from "overweight" and cut its price target to $11.44 (U.S.) from $15.55.
Wedbush downgraded Cisco to "neutral" from "outperform" and cut its price target to $23 (U.S.) from $26.
THIS MORNING'S TOP INVESTING LINKS:
A new index allows investors to track what the world's top investors are putting their money into and how well they're doing each quarter.
Bill Gross has boosted Treasury bond holdings for two straight months through October, betting that Treasury yields won't rise even if the Federal Reserve pares back monetary stimulus.
Canada is still far down the list when it comes to year-to-date returns.
Ed Yardeni thinks investors should be able to ride the bull market for another two to four years.
Why daily deal sites are giving up on daily deals.
Emerging markets are nearing new bull market lows in relative strength.
The good times are ending for the Mexican stock market.
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For instant headlines on breaking economic and corporate news in the premarket, follow Darcy Keith on Twitter at @eyeonequities.
David Berman