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.
U.S. stock index futures extended losses on Friday after a Labor Department report showed that 98,000 jobs were added in the public and private sector in March, far lower than economists' estimate of 180,000. After the report was released, U.S. stock futures fell further, down about 0.1 per cent. The TSX 60 futures also fell despite a strong jobs report from Canada.
That added to the shockwaves on world markets after U.S. President Donald Trump's overnight missile strike on the Syrian base that launched chemical weapons attacks. Stock markets around the world have come under pressure with the Dax dropping 0.4 per cent.
As often happens when tensions rise in the Middle East, crude oil is soaring. West Texas Intermediate is up 1 per cent while Brent is up 0.9 per cent pulling oil sensitive currencies like the Canadian dollar and Norwegian krone along for the ride. Rising geopolitical tensions also has gold rallying 0.9 per cent. Commodity price action could boost interest and activity in mining and energy stocks today.
It remains to be seen if the Syria flareup will continue to steal the spotlight from today's big events that traders have been waiting for all week.
Both the Syria air strikes and the jobs report overshadowed the long-awaited summit between Mr. Trump and Chinese President Xi Jinping, which started with a dinner last night and continues today with more meetings planned. So far relations have been cordial rather than frosty. There had been suggestions that this could be a difficult meeting with trade relations, currency manipulation and North Korea all potential flashpoints right at the top of the agenda.
German trade data released this morning showed an increased surplus, which was higher than expected and could have a negative impact on the President's tolerance related to trade issues. The U.K. posted a bigger than expected trade deficit which has sent Sterling down sharply and supported the FTSE, which is up 0.16 per cent so far today.
The other big impact event today is the U.S. nonfarm payrolls report, which was much weaker than expected. There has been some question lately with soft data like PMI and consumer confidence surveys for the U.S. running very strong but hard data points like consumer spending, retail sales and industrial production slowing a bit. Payrolls are the top hard data report of the month and could have a big impact on sentiment.
The Street was expecting nonfarm payrolls to drop back to 180,000 from 235,000 last month. But 98,000 jobs was far from that. U.S. payroll gains slowed in March while the jobless rate unexpectedly dropped to the lowest in almost a decade, suggesting the labour market is returning to a more sustainable pace of progress.
The 98,000 increase followed a 219,000 rise in February that was less than previously estimated, a Labor Department report showed Friday. The unemployment rate fell to 4.5 per cent from 4.7 per cent, and wage gains slowed to a 2.7 per cent year-over-year pace.
There are two other components of the report that could attract attention. Manufacturing payrolls are expected to decline and could attract attention from President Trump with his drive to bring factory jobs home, and could become an issue in his meetings with Chinese President Xi. Also, average hourly earnings could impact trading if there is a big surprise as the potential impact of inflation on monetary policy remains a key focus point with traders.
However, the jobs picture was much brighter in Canada as Statistics Canada reported the economy added 19,400 jobs in March — far more than the gain of 5,000 jobs that analysts had expected, according to Thomson Reuters. However, the unemployment rate rose slightly as expected to 6.7 per cent, from 6.6 per cent in February. The vast majority of the new work was full time, but the job survey also shows the bulk of those new positions were in the self-employment category, which can include people working for a family business without pay. More full-time jobs is viewed as a positive sign for the Canadian economy. Later in the morning, the Bank of Canada unveils its new bank note and Ivey PMI is due.
Now, here is a closer look at key market data, and corporate and economic news.
MARKET DATA:
Futures (as of about 8:50 a.m. ET)
Dow -0.26 per cent; S&P 500 -0.25 per cent; Nasdaq: -0.26 per cent; TSX 60 -0.07 per cent
Equities
Japan's Nikkei +0.36 per cent
Shanghai composite index +0.18 per cent
Hong Kong's Hang Seng -0.03 per cent
Germany's DAX -0.40 per cent
London's FTSE +0.09 per cent
France's CAC 40 -0.15 per cent
Commodities
WTI crude oil (Nymex May) +1.0 per cent at $52.20. (U.S.) a barrel
Gold (Comex June) 0.9 per cent at $1,265.10 (U.S.) an ounce
Copper (Comex May) -0.98 per cent at $2.63 (U.S.) a pound
Currencies
Canadian dollar +0.06 at 74.56 cents (U.S.)
U.S. dollar index +0.16 at 100.83
Bonds
Canada 10-year bond yield +0.06 at 1.53 per cent
KEY ECONOMIC RELEASES
Japan leading index
China foreign direct investment
Germany industrial production and trade surplus
European Union finance ministers meet in Malta (through Saturday)
(8:30 a.m. ET) Canada employment for March. Consensus is an increase of 3,200, or 0.00 per cent, from February.
(8:30 a.m. ET) Canada unemployment rate for March. Consensus is 6.7 per cent, up 0.1 per cent from February.
(8:30 a.m. ET) Canada average hourly wages for March. Estimate is an increase of 1.3 per cent year over year.
(8:30 a.m. ET) U.S. nonfarm payrolls for March. Consensus is an increase of 179,000 from February.
(8:30 a.m. ET) U.S. unemployment rate for March. Consensus is 4.7 per cent, unchanged from previous month.
(8:30 a.m. ET) U.S. average hourly earnings for March. Consensus is an increase of 0.2 per cent from February and a 2.7-per-cent rise year over year.
(10 a.m. ET) Canada Ivey PMI for March.
(10 a.m. ET) U.S. wholesale inventories for February. Estimate is an increase of 0.4 per cent from previous month.
(3 p.m. ET) U.S. consumer credit for February. Consensus is an increase of $12-billion from January.
KEY STOCKS TO WATCH
Also see: Friday's small-cap stocks to watch
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Bank of Montreal says chief executive Bill Downe plans to retire on Oct. 31 — at the end of the bank's current financial year. He will be succeeded on Nov. 1 by Darryl White, who has been BMO's chief operating officer.
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Merck sank 3.1 percent after regulators denied the company's move to label some of its diabetes drugs as safe for heart patients.
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Wal-Mart edged up 0.6 percent after Telsey Advisory Group upgraded the stock to "outperform."
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Nexen has joined ConocoPhillips in cutting oil sands output, Reuters reports. The two oil sands producers in northern Alberta have cut production at their facilities due to a shortage of synthetic crude. ConocoPhillips shares were up 0.8 per cent in premarket trading.
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Hudson's Bay Co. said on Friday it planned to invest around $570-million (U.S.) in Europe this year in a bid to grow its sales there by 20 per cent over the next two years.
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The head of Canadian Imperial Bank of Commerce made his case to shareholders Thursday for the proposed $4.9-billion (U.S.) purchase of Chicago-based PrivateBancorp Inc., a week after hiking the offer price by 20 per cent.
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With files from wire services