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.
It has been even busier than usual for world markets overnight and into this morning, with a number of major developments rocking trading action that could continue through the day today.
Wednesday, the Fed raised interest rates as expected and talked positively about the U.S. economy. Fed members in their dot plot kept their rate forecast at three hikes for this year. Fed Chair Janet Yellen indicated two to four hikes would qualify as gradual.
The U.S. dollar, however, had been pricing in four or five rate hikes this year and sold off following the meeting. I think the Fed is looking at quarterly increases, while saying three to give them the flexibility to pass on a quarter if something happens like a blowup over the budget or debt ceiling or some other event.
A number of other major central banks have had the opportunity to respond to the Fed decision. The People's Bank of China followed the Fed by hiking some rates through open market operations. The Bank of Japan and Swiss National Bank both maintained their negative interest rates. The Bank of Japan also kept its quantitative easing program going while the Swiss National Bank threatened to intervene in forex markets if needed. The Bank of England maintained its current 0.25 per cent interest rate and quantitative easing target, but there was one hawkish dissenter who voted for a 0.25 per cent rate increase on concerns about rising inflation. The Street has taken this to suggest that further rate cuts are unlikely and that the Bank of England may need to raise rates in the long term should inflation pressures build. The British pound is rallying on the news while the FTSE 100 has come off its highs.
There have been other market moving developments. Prior to the Fed, the Canadian dollar and Mexican peso soared on a combination of rising oil prices and comments from a Trump trade advisor about wanting to turn North America's three biggest countries into a manufacturing powerhouse.
After the Fed meeting, focus turned to the Netherlands election. Exit polls indicated Dutch voters rejected the populist Freedom party, giving it only 19 seats and putting it in a three-way tie for second. Prime Minister Mark Rutte's incumbent party is on track to win 31 seats, better than the 25 polls had suggested but down from 41 before the vote. While this was a setback for euroskeptics, it wasn't a ringing endorsement of the establishment either.
All of this news has sparked big swings in the markets. The lower U.S. dollar and Dutch election results initially sparked big rallies in currencies with the euro charging ahead along with the loonie, gold, the British pound, and the Japanese yen.
Into this morning, stock markets have taken up the baton. U.S. index futures are up 0.3 per cent. Futures for the TSX 60 are up about 0.7 per cent, suggesting the Canadian market may outperform the S&P 500 as markets open this morning. The Hang Seng and italy's FTSEMIB are up close to 2 per cent.
Energy markets remain active, with West Texas Intermediate crude up 0.6 per cent. This could keep energy stocks active again today after pulling indices upward Wednesday.
There are also a couple of individual companies that could attract attention today. Canada Goose makes its trading debut in Toronto and New York after raising $340-million through its initial public offering, which was priced at $17 per share, above the expected range. Meanwhile, Oracle could attract some attention after beating the Street on earnings and announcing a big dividend increase overnight.
Now, here's a closer look at this morning's data, plus economic and corporate news.
Futures (as of about 7:30 a.m. ET)
Dow +0.30 per cent; S&P 500 +0.25 per cent; Nasdaq: +0.30 per cent; TSX 60 +0.69 per cent
Japan's Nikkei +0.07 per cent
Shanghai composite index +0.86 per cent
Hong Kong's Hang Seng +2.08 per cent
Germany's DAX +0.93 per cent
London's FTSE +1.00 per cent
France's CAC 40 +0.76 per cent
WTI crude oil (Nymex April) +0.35 per cent at $49.21 (U.S.) a barrel
Gold (Comex April) +2.10 per cent at $1,225.90 (U.S.) an ounce
Copper (Comex May) +1.26 per cent at $2.69 (U.S.) a pound
Canadian dollar -0.0005 at 75.09 cents (U.S.)
U.S. dollar index +0.05 at 100.59
Canada 10-year bond yield +0.040 at 1.805 per cent
KEY ECONOMIC RELEASES
U.S. initial jobless claims were 241,000 last week vs. the 240,000 estimated by the Street.
Still to come:
(10 a.m. ET) U.S. Job Openings & Labor Turnover Survey for January
KEY STOCKS TO WATCH
Pricey parka maker Canada Goose Holdings Inc. is raising $340-million in an initial public offering, becoming the third Canadian consumer brand to go public since last October. The Toronto-based company is selling 20-million subordinate voting shares for $17 each, pricing them above its expected $14 to $16 range.
GoPro has announced 270 job cuts and pre-announced that its first-quarter earnings would be at the high end of guidance, around $210 million. It also said it would cut operating expenses by more than $200 million and return to EBITDA profitability in 2017. The stock is up 11 per cent in the premarket.
Oracle Corp. posted third-quarter revenue and profit that topped analysts' estimates, signaling growing demand for the software maker's cloud-based services that compete with Amazon.com Inc. and Salesforce.com Inc. Profit before certain items was 69 cents a share, compared with an average estimate of 62 cents. Shares are up more than 6 per cent in the premarket.
Shares of Tesla rose 2.3 per cent to $261.58 after the electric carmaker said it would raise about $1.15 billion as the company speeds up the launch of its Model 3 sedan.
Biogen slipped 2.2 per cent to $286 after Morgan Stanley and Leerink downgraded the drugmaker's stock and cut price targets.
Dollar General rose 5 per cent to $76.50 after the discount retailer reported a 13.7 percent jump in quarterly sales.
Other earnings today include: Adobe Systems Inc.; Aurinia Pharmaceuticals Inc.; AutoCanada Inc.; BRP Inc.; HNZ Group Inc.; Nautilus Minerals Inc.; Pilot Gold Inc.; Premium Brands Holdings Corp.
Also see: Thursday's small-cap stocks to watch
With files from wire services