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Before the Bell: Stocks set to open mixed as oil rebounds

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.

The big swings in global indices around the first U.S. Presidential debate have subsided for now as traders wait for the next shoe to drop, likely post debate voting poll results. The twists and turns of a close campaign between wildly different policy directions may continue to drive trading swings and opportunities over the next six weeks or more. U.S. index futures are mixed this morning, with the Dow up marginally and the S&P flat to down.

European indices have caught up with yesterday's U.S. afternoon advance with the FTSE ‎up 0.8 per cent and the Dax up 1.1 per cent. Some of the pressure has come off of Deutsche Bank amid reports of possible state support to deal specifically with potential U.S. fines but only as a last resort.

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Crude oil is up again this morning with West Texas Intermediate up 1.4 per cent and Brent up 2.0 per cent. Traders have decided to look past this week's Algeria informal meetings toward the formal OPEC meeting on Nov. 30 for a potential production freeze deal. Meanwhile, the U.S. supply and demand situation continues to improve and provide fundamental support. American Petroleum Institute inventories fell by 0.75 million barrels of oil (mmbbls) last week. Traders now look to today's Department of Energy report for confirmation. Gasoline is also climbing this morning ahead of its own inventory number.

Today brings U.S. durable goods orders and several Fed speakers, including testimony to Congress by Chair Janet Yellen. Last night San Francisco Fed President John Williams joined Dallas Fed President Robert Kaplan and other non voters this year who have stated they would have voted for a rate hike last week had they ‎been able to do so.

With the Fed unlikely to touch interest rates until after the election, the focus of the next month turning to earnings and politics, today's numbers and comments are less likely to have an impact on the U.S. dollar unless someone surprises and changes their stance in a major way. Indications on the health of the U.S. economy could influence trading in stocks and commodities on any carry through for corporate earnings or resource demand expectations.

Blackberry is rallying in premarket trading today, up 4.7 per cent, on better than expected earnings and improved guidance. The company reported adjusted EPS of $0.00, better than the $0.05 per share loss the street had expected. CEO John Chen raised the full year adjusted earnings outlook to a loss of $0.05 to breakeven from a previously projected loss per share of $0.15, based on improving margins and lower interest costs.

Traders appear to be shrugging off a shortfall in revenues which were $334-million, below the $393-million that had been widely expected. Traders have decided to focus on the 89 per cent revenue growth year-over-year in their software as services business to $156-million, surpassing the $105-million in revenues generated by the Mobility Solutions (hardware) business.

Today also marks a big transition for Blackberry and the end of an era for the company announcing that it is "ending all internal hardware development and will outsource that function to partners" starting with a joint venture in Indonesia. The company plans to shift its focus fully to communications and security software development reducing capital requirements and increasing margins.

Now, here is a closer look at what's going on this morning and what is still to come.

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MARKET DATA:

Futures (as of about 9 a.m. ET)

Dow +0.03 per cent; S&P 500 +0.00 per cent; Nasdaq: +0.04 per cent; TSX 60 +0.27 per cent

Equities
Japan's Nikkei -1.31 per cent
Shanghai composite index -0.34 per cent
Hong Kong's Hang Seng +0.20 per cent 
Germany's DAX +1.12 per cent
London's FTSE +0.85 per cent
France's CAC 40 +1.14 per cent

Commodities
WTI crude oil (Nymex Nov.) +1.43 per cent at $45.32 (U.S.) a barrel
Gold (Comex Dec.) -0.12 per cent at $1,328.80 (U.S.) an ounce
Copper (Comex Dec.) +0.46 per cent at $2.18 (U.S.) a pound

Currencies
Canadian dollar -0.16 at 75.62 cents (U.S.)
U.S. dollar index +0.12 at 95.54

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Bonds
Canada 10-year bond yield +1.30 at 0.956 per cent

KEY ECONOMIC RELEASES

Germany GfK consumer confidence

(8:30 a.m. ET) U.S. durable goods orders for August. Consensus is a decline of 1.4 per cent from July. Excluding transportation, the consensus is a 0.5-per-cent decline.

New orders for non-military U.S. capital goods other than aircraft rose for a third straight month in August, a positive signal for the business investment outlook.

The U.S. Commerce Department said on Wednesday new orders for the category, which includes goods like motor vehicles and machinery and is a closely watched proxy for business spending plans, increased 0.6 per cent last month.

Economists polled by Reuters had forecast these core capital goods orders falling 0.2 per cent.

The government downwardly revised its estimate for those orders in July to a 0.8-per-cent gain from the previously reported 1.5-per-cent increase.


(10 a.m. ET) U.S. Fed chair Janet Yellen testifies before the House Financial Services Committee hearing regarding Wells Fargo's banking activities.
(10:30 a.m. ET) EIA petroleum status report.

KEY STOCKS TO WATCH

Mattress maker Tempur Sealy's shares plunged nearly 24 per cent in premarket trading after the company forecast disappointing full-year sales.

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Nike dropped 2.9 per cent to $53.76 after the shoemaker's future orders missed analysts' estimates for the third time in a row, attracting a slew of price targets by brokerages.

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Sarepta Therapeutics rose 2.5 per cent to $60.58 (U.S) after RBC raised its price target on the drugmaker's stock.

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AGF Management reported third quarter adjusted earnings per share of 13 cents, matching Street estimates.

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Wells Fargo CEO John Stumpf will forfeit $41-million (U.S.) in equity awards following the recent sales scandal, while former community banking head Carrie Tolstedt will give up $19-million in equity awards.

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Deutsche Bank CEO John Cryan told a German newspaper that the bank did not need any government assistance or a capital increase. The shares have been under pressure on worries that an anticipated multibillion-dollar fine from the U.S. Justice Department could damage the bank's finances.

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UBS downgraded AT&T to "neutral" from "buy," pointing to lower earnings growth and increasing competition in the wireless business.

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Share in Macy's were downgraded to "neutral" from "outperform" at Credit Suisse, saying Macy's is now in an "execution phase" of a strategic shift and that investors are likely to wait to see results.

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Mizuho downgraded Twitter to "underperform" from "neutral" on a valuation basis, saying it was skeptical about most of the takeover rumours about the company.

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Wedbush downgraded the stock of Alphabet, Google's parent company, to "underperform" from "neutral," on a variety of concerns about future monetization of online search.

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Earnings include: Actuant Corp.; BlackBerry Ltd.; Paychex Inc.

With files from wire services

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