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.
Focus on the Fed, Oil and Netherlands Election today
The Ides of March has arrived at last with the potential for significant market moving developments. U.S. indexes and the FTSE are up 0.2 per cent so far today. The U.S. dollar is down slightly, enabling the British pound, euro and the Canadian dollar to bounce back while gold and Japanese yen are holding steady.
The main event for the U.S. today is the Federal Open Market Committee decision due at 2:00 p.m. ET. The Fed is expected to raise interest rates by 0.25 per cent, and it would be a huge surprise if they didn't. Traders may focus more on the statement, economic forecasts and particularly the Fed Funds end-of-year forecast, also know as the Dot Plot.
The Fed's party line for this year has been for three hikes, but an increase today would open the door to four at a gradual quarterly pace. If the Fed stays at three, it would suggest they acted now to give themselves some flexibility in case the debt ceiling or some other issue causes disruptions later in the year. It appears the Fed may be becoming more proactive after stalling its way into a corner in both 2015 and 2016.
The big event for trading in Canada today is the release of U.S. Department of Energy (DOE) inventories at 10:30 am ET. Yesterday, the TSX underperformed its U.S. peers due to a 10-per-cent plunge in Valeant Pharmaceuticals and another big drop in energy stocks as the oil price collapse continued. After the exchanges closed, however, WTI rebounded as API reported a 500,000 barrel drop in U.S. oil inventories. WTI is now up 1.9 per cent overnight heading into the DOE report where the street has been looking for a 3.2 million barrel increase. This news could keep oil and energy stocks active through the day.
In Europe, the focus today is on the Netherlands election, where the Liberals are widely expected to win. The Euroskeptic Freedom Party (PVV) is running in second and may be picking up momentum following a diplomatic incident with Turkey over the weekend. A win by pro-Euro forces in a core EU country could help to maintain the status quo and deal a setback (but not a defeat) to the forces of change. On the other hand, if Geert Wilders were to win it would be seen as a big defeat for the pro-EU side and could pressure the Euro.
In the UK today, Brexit and employment are in focus. UK jobless claims fell more than expected and the unemployment rate was better than expected, but these positives were offset by lower-than-expected wage inflation. Meanwhile, despite calls for a second referendum from the SNP, a poll shows support for the Union rising not falling as Brexit approaches.
The potential for big news continues with more central banks meeting tomorrow including the Bank of Japan, Bank of England, Norges Bank, and Swiss National Bank. The US preliminary budget request is expected later this week. Plus we could see more talk on trade Friday with G20 finance ministers meeting in Germany and Chancellor Angela Merkel meeting U.S. president Donald Trump in Washington.
Futures (as of about 7:30 a.m. ET)
Dow +0.20 per cent; S&P 500 +0.23 per cent; Nasdaq: +0.19 per cent; TSX 60 +0.23 per cent
Japan's Nikkei -0.12 per cent
Shanghai composite index +0.07 per cent
Hong Kong's Hang Seng -0.01 per cent
Germany's DAX +0.18 per cent
London's FTSE +0.18 per cent
France's CAC 40 +0.04 per cent
WTI crude oil (Nymex April) +1.03 per cent at $48.75 (U.S.) a barrel
Gold (Comex April) -0.11 per cent at $1,201.30 (U.S.) an ounce
Copper (Comex May) +1.01 per cent at $2.662 (U.S.) a pound
Canadian dollar +0.083 at 74.31 cents (U.S.)
U.S. dollar index -0.16 at 101.58
Canada 10-year bond yield +0.08 at 1.82 per cent
KEY ECONOMIC RELEASES
(8:30 a.m. ET) Canada national balance sheet and financial flow accounts for Q4.
(8:30 a.m. ET) U.S. consumer price index (CPI) for February. Consensus is unchanged from January and up 2.7 per cent year over year. Excluding food and energy, the consensus projections are increases of 0.1 per cent from the previous month and year over year.
(8:30 a.m. ET) U.S. retail sales for February. Consensus is an increase of 0.1 per cent from January. Excluding automobiles, the projection is also a 0.1-per-cent rise.
(8:30 a.m. ET) U.S. Empire State Manufacturing Survey for March.
(9 a.m. ET) Canada existing home sales and average prices for February. Estimate is a decline of 2.0 per cent and rise of 2.0 per cent, respectively, year over year.
(10 a.m. ET) U.S. business inventories for January (final). The estimate is an increase of 0.3 per cent from December.
(10:30 a.m. ET) EIA petroleum status report
(9 a.m. ET) MLS Home Price Index for February. Estimate is an increase of 14.5 per cent year over year.
(2 p.m. ET) U.S. FOMC announcement and summary of economic projections to be followed by chair Janet Yellen's press briefing at 2:30 p.m.
KEY STOCKS TO WATCH
Earnings include: Ag Growth International Inc.; Altius Minerals Corp.; B2Gold Corp.; Bellatrix Exploration Ltd.; Birchcliff Energy Ltd.; Bonterra Energy Corp.; Concordia International Corp.; Klondex Mines Ltd.; North West Company Inc.; Oracle Corp.; Petrowest Corp.; Pine Cliff Energy Ltd.; Primero Mining Corp.; Turquoise Hill Resources Ltd.; Zargon Oil & Gas Ltd.
Also see: Wednesday's small-cap stocks to watch
Manulife Financial Corp. (MFC-T) has been granted a license that will allow it to launch investment products in China through a wholly owned local subsidiary, as Beijing further liberalizes its capital markets.
U.S. Justice Department officials are expected to announce indictments on Wednesday against suspects in at least one of a series of hacking attacks on Yahoo Inc., according to a source briefed on the matter. The accused men live in Russia and Canada, the source said, with the Canadian far more likely to face arrest. Russia has no extradition treaty with the United States.
With files from wire services