Colin Cieszynski
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 euphoric rally in U.S. markets that carried the Dow up above 21,000 and the Dax to 12,000 has paused for a rest amid a lighter news day. Even though the bulls are taking a break, the bears have been unable to mount a counterattack either with U.S. index futures, the FTSE and the Dax all holding steady.
The upward adjustment to Tuesday night's speech from U.S. President Donald Trump having run its course, and traders now awaiting budget details and priorities. The President has set out a big agenda and it remains to be seen what is likely to be done first and what may have to be pushed off to later this year or next. There has been a kerfuffle overnight about U.S. Attorney General Jeff Sessions having met with Russia's ambassador during the 2016 election campaign but later telling Congress he had no contact with the Russians. While this may not have a direct impact on the economy, it does indicate that the political road ahead may be a lot bumpier than the market is currently thinking.
The U.S. dollar is rallying again following comments from Federal Reserve Governor Lael Brainard last night. She has long been one of the leaders of the dovish faction at the Fed and had been the one to dump cold water on rate hike speculation in the past. Last night she suggested it would be appropriate to raise rates soon, while she didn't call for a March hike, she didn't reject the notion either. This indicates there is a definite shift in thinking at the Fed under the new Administration.
Defensive plays like gold, which is down 0.6 per cent, and the yen are getting hit the hardest, along with Australian and New Zealand dollars. The British pound is mixed again, down slightly against U.S. dollar, steady against the euro and up against the yen on indications that the U.K. government is looking to overturn the House of Lords amendment and reports that Article 50 could be triggered within a couple of weeks. .
The loonie is under pressure again but it's not down as much as some of the other resource dollars. Yesterday's Bank of Canada announcement was neutral to slightly dovish, no rate hikes are likely any time soon with the Canadian economy improving but still having more slack than the U.S. At the same time, we may only see a rate cut if changes to U.S. policies cause trade disruptions.
It's another big day for Canada earnings. Toronto-Dominion Bank wrapped up bank earnings week on a high note with strong results and a big dividend increase. Canadian Natural also beat the Street and raised its dividend while George Weston disappointed. The loonie could be active around today's Canadian December and fourth quarter GDP reports. Statistics Canada says the economy grew by an annualized rate of 2.6 per cent in the fourth quarter, above expectations.
Now, here is a closer look at key market data, and corporate and economic news.
MARKET DATA:
Futures (as of about 8:40 a.m. ET)
Dow +0.14 per cent; S&P 500 0.00 per cent; Nasdaq: +0.11 per cent; TSX 60 +0.15 per cent
Equities
Japan's Nikkei +0.88 per cent
Shanghai composite index -0.50 per cent
Hong Kong's Hang Seng -0.20 per cent
Germany's DAX +0.04 per cent
London's FTSE -0.08 per cent
France's CAC 40 +0.19 per cent
Commodities
WTI crude oil (Nymex April) -0.41 per cent at $53.42 (U.S.) a barrel
Gold (Comex April) -0.78 per cent at $1,240.30 (U.S.) an ounce
Copper (Comex May) -0.35 per cent at $2.73 (U.S.) a pound
Currencies
Canadian dollar -0.23 at 74.77 cents (U.S.)
U.S. dollar index +0.28 at 102.06
Bonds
Canada 10-year bond yield -0.06 at 1.69 per cent
KEY ECONOMIC RELEASES
Euro Area producer price index and jobless rate
U.K. construction PMI
(8:30 a.m. ET) Canada real GDP for Q4. Consensus is annualized rate increase of 2.0 per cent.
Canada's economy performed better than expected in the fourth quarter, with annualized GDP growth of 2.6 percent, driven by higher outlays on durable goods and financial services, Statistics Canada said on Thursday. Following are seasonally adjusted figures for gross domestic product, in percent. With the exception of the price index data, they are adjusted for inflation.
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(8:30 a.m. ET) Canada chain prices for Q4. Estimate is an annualized rate increase of 2.5 per cent.
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(8:30 a.m. ET) Canada real GDP at basic prices for December. Consensus is a rise of 0.3 per cent from November.
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(8:30 a.m. ET) U.S. initial jobless claims for week of Feb. 25. Estimate is 245,000, a rise of 1,000 from previous week.
The number of Americans filing for unemployment benefits fell to near a 44-year-low last week, pointing to further tightening in the labour market even as economic growth appears to have remained moderate in the first quarter. Initial claims for state unemployment benefits dropped 19,000 to a seasonally adjusted 223,000 for the week ended Feb. 25, the lowest level since March 1973, the Labor Department said on Thursday. Data for the prior week was revised to show 2,000 fewer applications received than previously reported. It was the 104th straight week that claims remained below 300,000, a threshold associated with a healthy labour market.
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(12:45 p.m. ET) Bank of Canada deputy governor Timothy Lane speaks in Montreal.
KEY STOCKS TO WATCH
Also see: Thursday's small-cap stocks to watch
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Toronto-Dominion Bank, Canada's second-biggest lender, on Thursday reported quarterly earnings ahead of market expectations, helped by a strong performance in both the United States and Canada. TD said earnings per share in the first quarter ended Jan. 31 rose to $1.32, compared with $1.17 a year ago. Analysts had on average forecast earnings of $1.27 per share during the quarter, according to Thomson Reuters I/B/E/S. TD also boosted its dividend by five cents to 60 cents and announced a 15-million share buyback plan. Its shares rose 2.6 per cent in premarket trading.
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Canadian Natural Resources Ltd., Canada's largest independent petroleum producer, on Thursday reported a quarterly profit that blew past analysts' expectations, driven by higher realized prices from North America and low costs. Net income jumped more than fourfold to $566-million. On an adjusted basis it posted a profit of $439-million in the quarter ended Dec. 31, compared with a loss of $49-million a year earlier. On a per share basis, its adjusted profit of 40 cents easily beat the 12 cents analysts on average were expecting, according to Thomson Reuters I/B/E/S. The company also raised its quarterly dividend by 10 per cent.
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SNC-Lavalin Group Inc. had net income of $1.6-million in its fourth quarter, down from $49.2 million in the previous year. SNC said its adjusted earnings during the quarter was 77 cents per share, including 49 cents from its core engineering and construction business. Analysts had estimated 47 cents per share of adjusted earnings from engineering and construction, according to Thomson Reuters data.
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Snap Inc.'s in-demand shares are set to start trading in New York on Thursday after the owner of the popular Snapchat messaging app raised $3.4-billion in its initial public offering (IPO) on Wednesday, above its price expectations.
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JD.com rose 6 percent to $32.53 in premarket trading after the Chinese e-commerce company reported a 47 percent jump in fourth-quarter revenue. Its shares rose 4.2 per cent in premarket trading.
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Monster Beverage jumped 14 percent in premarket trading following a quarterly revenue that beat analysts' average estimate.
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Kite Pharma slipped 4 percent to $76 on Citigroup's downgrade to "neutral" and the company's planned offering.
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Shake Shack reported adjusted quarterly profit of 9 cents per share, in line with estimates, while the restaurant chain's revenue beat forecasts. Its shares fell 3.8 per cent in premarket trading.
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Mining equipment maker Joy Global lost an adjusted 6 cents per share for its latest quarter, 3 cents a share less than analysts had been anticipating. Revenue was also below Street forecasts. Its shares slipped 0.07 per cent in premarket trading.
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Box Inc. is finally bringing in more money than it is spending, the cloud software company said, a milestone investors have been waiting for since its initial public offering more than two years ago. Broadcom came in 15 cents above estimates, with adjusted quarterly earnings of $3.63 per share. The chip maker's revenue was slightly above Street projections. Its shares slipped 1 per cent in premarket trading.
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Broadcom came in 15 cents above estimates, with adjusted quarterly earnings of $3.63 per share. The chip maker's revenue was slightly above Street projections. Its shares rose 5 per cent in premarket trading.
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Earnings include: TransAlta Corp.; Advantage Oil & Gas Ltd.; Algonquin Power & Utilities Corp.; Atlantic Power Corp.; Autodesk Inc.; Barnes & Noble Inc.; Bonavista Energy Corp.; Canadian Natural Resources Ltd.; Canyon Services Group Inc.; Cascades Inc.; Cipher Pharmaceuticals Inc.; Endeavour Silver Corp.; Enerflex Ltd.; George Weston Ltd.; JD.com Inc.; Kroger Co.; Major Drilling Group International Inc.; Martinrea International Inc.; Morneau Shepell Inc.; Parkland Fuel Corp.; Shawcor Ltd.; Snc-Lavalin Group Inc.; Toronto-Dominion Bank;
With files from wire services