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Before the Bell: Bears unable to mount counterattack

The Before the Bell report is compiled by editors of The Globe and Mail and is updated throughout the morning to reflect latest developments. Colin Cieszynski, Chartered Financial Analyst and Chartered Market Technician, is chief market strategist with CMC Markets.

Wednesday's positive momentum has continued overnight and into this morning's trading, although the pace of gains has slowed somewhat. Mixed news overnight appears to have dampened bullish spirits a bit but not crushed them. Meanwhile, bears remain unable to use negative news to mount a counterattack, a sign of exhaustion on their side.

Following another day of gains in Asia Pacific markets, continental indexes in Europe are rising today with Germany's Dax up 1.5 per cent. London's FTSE has declined 0.3 per cent and is lagging a bit with the two-day EU Brexit summit underway, although this may partly be due to a nice 0.5 per cent bounce for the British pound, which has been underperforming lately. The euro is sliding following dovish European Central Bank minutes that showed the central bank remains concerned about the inflation outlook and is still looking at additional stimulus for March - even going so far as to debate taking action even sooner.

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U.S. index futures for the Dow, S&P and Nasdaq are trading up 0.3-0.6 per cent. An early morning rally has moderated a bit after the OECD cut its 2016 GDP growth forecast for the U.S. and several other countries, blaming reduced trade and sluggish demand. Declines have been orderly so far, suggesting a normal trading correction.

Overnight comments from St. Louis Fed President James Bullard provided what looks to be an accurate summary of current Fed thinking. He suggested it would be unwise to continue normalizing policy with inflation falling (which lowers the neutral interest rate anyway). Having previously been among the more hawkish faction, this suggests the Fed could be leaning to delay the next rate hike out beyond March. He also suggested that the Fed still has lots of tools available for stimulus, including more quantitative easing before having to resort to negative interest rates. This suggests recent negative U.S. rate talk has been more to put the threat out there in a bid to keep the other central banks in line, rather than a serious policy option.

Wal-Mart earnings were slightly disappointing while a big miss from Dish Network indicates cable providers continue to struggle with cord cutting. In Canada, there's already been a positive retailer surprise out of Canadian Tire this morning, which could offset mixed results from gold producers.

Crude oil continues to advance today with Brent taking a run at $35.00 and West Texas intermediate hanging on to recent gains. U.S. API inventories had a surprise drop overnight, so traders may look to today's Department of Energy report for confirmation. Oil, gasoline and natural gas could all be active through the morning around storage reports, plus any additional comments from producing countries about this week's supply talks and potential freeze. The Canadian dollar is steady this morning.

Now, here is a closer look at key market data, and corporate and economic news.

MARKET DATA:

Futures

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S&P 500 +0.4 per cent; Dow +0.5 per cent; Nasdaq:+0.5 per cent; TSX 60 +0.6 per cent

Equities
Hong Kong's Hang Seng +2.32 per cent
Shanghai composite index -0.15 per cent
Japan's Nikkei 225 +2.28 per cent
London's FTSE -0.27 per cent
Germany's DAX +1.54 per cent
France's CAC 40 +0.84 per cent

Commodities
WTI crude oil (Nymex March) +2.35 per cent at $31.38 (U.S.) a barrel
Gold (Comex April) -0.58 per cent at $1,204.30 (U.S.) an ounce
Copper (Comex May) -0.63 per cent at $2.07 (U.S.) a pound

Currencies
Canadian dollar +0.0005 at 73.14 cents (U.S.)
U.S. dollar index +0.080 at 96.866

Bonds
U.S. 10-year Treasury yield -0.0095 at 1.81 per cent

KEY ECONOMIC RELEASES

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The number of Americans filing for unemployment benefits unexpectedly fell last week, pointing to labor market strength that could keep Federal Reserve interest rate hikes on the table this year. Initial claims for state unemployment benefits decreased 7,000 to a seasonally adjusted 262,000 for the week ended Feb. 13, the lowest reading since November, the Labor Department said on Thursday. The prior week's claims were unrevised. Economists polled by Reuters had forecast claims rising to 275,000 in the latest week.

Canadian wholesale trade rose more than expected in December, climbing 2.0 per cent from November on record sales in the motor vehicle and parts sector, data from Statistics Canada showed on Thursday.  Sales in the motor vehicle component surged 13.7 percent, recording its second consecutive monthly increase. Excluding the auto sector, wholesale sales rose 0.1 per cent.

(10 a.m. ET) U.S. leading indicators for January. Consensus is a decline of 0.2 per cent from December.

KEY CORPORATE NEWS

Wal-Mart Stores Inc. lowered its annual sales forecast after the strong dollar pulled down the value of overseas revenue. The company now expects net sales growth to be flat this year, compared with a previous forecast for growth as high as 4 per cent. Its U.S. same-store sales increase also was slow last quarter, rising just 0.6 per cent. That fell short of the 1 per cent analysts had predicted. Excluding some items, earnings were $1.49 a share in the fourth quarter. Analysts had predicted $1.46 on average, according to data compiled by Bloomberg. Fourth-quarter revenue fell 1.5 per cent to $129.7 billion, also hurt by currency effects. Analysts had predicted $130.6 billion.

Barrick Gold Corp. intends to keep debt in its crosshairs with a plan to cut at least $2 billion this year as the world's largest producer of the metal seeks to shore up its balance sheet following three annual gold-price declines. Barrick said late Wednesday it narrowed its fourth-quarter net loss to $2.62 billion, or $2.25 a share, from $2.85 billion, or $2.45, a year earlier. Earnings excluding impairment charges of $2.6 billion and other one-time items were 8 cents a share, topping the 6-cent average of 22 estimates compiled by Bloomberg. Sales decreased 11 per cent to $2.24 billion, beating the $2.17 billion average estimate.

Canadian Tire reported Q4 revenue of $3.38 billion, missing the consensus of $3.45 billion. It also announced a share buyback.

Finning International said it was cutting an additional 400 to 500 jobs as it reported Q4 adjusted EPS of 23 cents, versus estimates of 35 cents.

TransAlta reported Q4 EPS of 1 cent vs. an estimated 13 cents.

IBM rose 2.8 per cent in the premarket after Morgan Stanley upgraded the stock to "overweight", saying the company's transformation to a cloud-focused business is underappreciated.

Nvidia was up 8.5 per cent in the premarket after the chipmaker's revenue beat expectations.

Perrigo was down 4.4 per cent in the premarket after the drugmaker reported a fourth-quarter loss.

Marathon Oil Corp. gained 5.5 per cent in European trading after the crude producer reduced its production outlook and said it would cut spending.

International Business Machines Corp said on Thursday it plans to acquire Truven Health Analytics, a provider of healthcare data and analytics, for $2.6 billion, marking its fourth major health data-related deal in the past year.

Devon Energy Corp. will raise about $1.3 billion (U.S.) by selling shares, joining at least six other U.S. oil and gas companies to tap Wall Street equity investors this year to weather the slump in energy prices. The oil explorer will sell as many as 69 million shares, 25 percent more than originally planned, at $18.75 apiece

Other earnings today include: Algoma Central Corp.; Applied Materials Inc.; Canam Group Inc.; Canfor Corp.; Canfor Pulp Products Inc.; Capital Power Corp.; Consolidated Edison Inc.; Cott Corp.; Duke Energy Corp.; Fairfax Financial Holdings Ltd.;  Finning International Inc.; First Capital Realty Inc.; First Quantum Minerals Ltd.; Fortis Inc.; Hyatt Hotels Corp.; Inter Pipeline Ltd.; Lundin Mining Corp.; MGM Resorts International; Nordstrom Inc.; Pan American Silver Corp.; Primero Mining Corp.; Starwood Hotels & Resorts Worldwide Inc.; Superior Plus Corp.; Supremex Inc.; RioCan REIT; TransAlta Corp.; Valspar Corp.; Waste Management Inc.; Yamana Gold Inc.

Also see: Thursday's small-cap stocks to watch

With files from wire services

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