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.
Despite a positive earnings report from Intel and a headline beat from Yahoo overnight, stock futures started the morning trading flat to slightly lower, but edged slightly higher as the open approached with U.S. index futures up 0.2 per cent, while the FTSE and the DAX were up 0.1 per cent or less.
Traders appear to be sitting on their hands awaiting tonight's final U.S. Presidential debate. Markets appear to have fully priced in a win by Democratic candidate Hillary Clinton and also seem to be overly complacent about it leaving the door open to a Brexit-type of surprise.
Gold is climbing today indicating that some traders may be getting concerned about U.S. political risk ahead of the debate. Other markets that could be active around the event include Biotech stocks (sensitive to Clinton hostility) and the Mexican Peso (sensitive to Trump hostility).
The greenback is trading down slightly ahead of the debate. China GDP met expectations but was supported by higher than expected government spending. U.K. employment growth was better than expected supporting a bounce in the pound. More Fed speakers and the Beige Book regional economic report could keep Fed speculation simmering away in the background.
The loonie could be particularly active today with the potential for market moving developments on two fronts.
Crude oil is rallying today with West Texas Intermediate and Brent both up 1.3 per cent. A surprise drop in U.S. American Petroleum Institute inventories and talk from Saudi Arabia that some non-OPEC countries are talking about joining a production freeze or cut deal has Black Gold trading higher this morning. Oil may remain active through the morning with U.S. Department of Energy oil inventory data due. Last night, the Canadian dollar rallied in tandem with the API result.
Today's Bank of Canada decision may also have a big impact on the loonie. Governor Stephen Poloz is expected to keep rates on hold today so traders are likely to focus on the statement for clues about future direction. The central Bank has been counting on a summer rebound from a terrible wildfire-impacted spring.
In his last statement, Governor Poloz expressed concern about a sluggish July, but monthly GDP data later indicates it was not as bad as feared. Employment has been picking up lately and oil prices have held up so this time traders may be looking for a more upbeat tone anticipated by recent Canadian dollar gains. If the statement is overly cautious or negative it could raise speculation of a rate cut and drag on loonie.
Now, here is a closer look at what's going on this morning and what is still to come.
MARKET DATA:
Futures (as of about 9:10 a.m. ET)
Dow +0.23 per cent; S&P 500 +0.20 per cent; Nasdaq: +0.08 per cent; TSX 60 +0.07 per cent
Equities
Japan's Nikkei +0.21 per cent
Shanghai composite index +0.05 per cent
Hong Kong's Hang Seng -0.38 per cent
Germany's DAX +0.12 per cent
London's FTSE +0.02 per cent
France's CAC 40 +0.14 per cent
Commodities
WTI crude oil (Nymex Nov.) +1.27 per cent at $50.93 (U.S.) a barrel
Gold (Comex Dec.) +0.63 per cent at $1,270.80 (U.S.) an ounce
Copper (Comex Dec.) -0.24 per cent at $2.10 (U.S.) a pound
Currencies
Canadian dollar +0.16 at 76.41 cents (U.S.)
U.S. dollar index -0.08 at 97.81
Bonds
Canada 10-year bond yield +0.736 at 1.19 per cent
KEY ECONOMIC RELEASES
China real GDP, industrial production, retail sales and fixed asset investment
China's economy expanded at a steady 6.7 per cent in the third quarter and looks set to hit Beijing's full-year target, fueled by stronger government spending, record bank lending and a red-hot property market that are adding to its growing pile of debt. On a quarterly basis, it grew 1.8 per cent, again in line with expectations but easing slightly from the previous period.
Japan all-industry activity index
United Kingdom jobless claims and rate
(8:30 a.m. ET) U.S. housing starts for September. Consensus is an annualized rate increase of 2.9 per cent.
Homebuilders pulled back on construction for a second straight month in September, with a plunge in apartments offsetting gains in single-family homes. Building activity was weak in all parts of the country except the Midwest. The Commerce Department says construction tumbled 9 per cent in September to a seasonally adjusted annual rate of 1.05 million units. It was the slowest pace in 18 months. Construction had fallen 5.6 per cent in August. The weakness last month reflected a 38 per cent drop in construction of apartments, which overshadowed an 8.1 per cent rise in single-family construction.
(8:30 a.m. ET) U.S. building permits for September. Estimate is an annualized rate increase of 1.1 per cent.
(10 a.m. ET) Bank of Canada policy announcement and monetary policy report with press conference to follow at 11:15 a.m.
(10:30 a.m. ET) EIA petroleum status report
(2 p.m. ET) U.S. Beige Book released.
(4:15 p.m. ET) Bank of Canada Governor Stephen Poloz and senior deputy governor Carolyn Wilkins appear in Ottawa before the Senate Standing Committee on Banking, Trade and Commerce.
KEY STOCKS TO WATCH
Canadian Pacific Railway is reporting a $347 million profit for its third quarter, which is higher than the same time last year but below analyst expectations. The profit amounted to $2.34 per share or $2.73 per share after adjustments -- both below analyst estimates of $2.79 per share, according to data compiled by Thomson Reuters. For the three months ended Sept. 30, the Calgary-based railway had $1.55 billion of revenue, down from $1.71 billion last year. Its shares fell 4.4 per cent in premarket trading.
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Canadian media company Corus Entertainment Inc. reported a sharp drop in quarterly profit as it digested Shaw Communications Inc.'s media business, which it acquired in a $2.65-billion deal in January. Corus's net income attributable to shareholders fell to $25,000 in the fourth quarter ended Aug. 31 from $17.8-million a year earlier. Corus broke even on a per-share basis, compared with a profit of 21 cents per share a year earlier. Excluding items, the company earned 7 cents per share, less than half of analysts' average estimate of 15 cents, according to Thomson Reuters I/B/E/S.
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The board of Canexus Corp. is advising its shareholders to reject a takeover offer from Chemtrade Logistics Income Fund, which values the chemical company at $884 million including assumed debt. The Calgary-based sodium chlorate producer says its board believes Chemtrade's offer of $1.50 per common share is too low.
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Canada's No. 2 pension fund, Caisse de depot et placement du Quebec (CDPQ), has acquired a minority stake worth $155-million (U.S.) in India's TVS Logistics Services Ltd, the privately held Indian company said in a statement on Wednesday. The Caisse will buy most of the stake currently held jointly by Goldman Sachs and KKR & Co. LP while parent TVS Group's management will acquire the rest.
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Morgan Stanley's quarterly profit and revenue beat consensus estimates, rounding off a strong quarter for big U.S. banks. Earnings applicable to shareholders rose 61.7 percent to $1.52 billion from $939 million for the quarter ended Sept. 30, while earnings per shares rose to 81 cents from 48 cents. Earnings per share from continuing operations was 80 cents, far above the average analyst estimate of 63 cents, according to Thomson Reuters I/B/E/S.The bank's shares rose 1.27 per cent in premarket trading.
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Yahoo rose 1.25 per cent after reporting overnight that its third quarter profit beat estimates.
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Halliburton Co, the world's No.2 oilfield services provider, posted a surprise quarterly profit, helped by higher cost cuts, and said it expected a rise in oil prices to boost rig count. Profit attributable to Halliburton was $6 million, or 1 cent per share, in the third quarter ended Sept. 30, compared with a loss of $54 million, or 6 cents per share, a year earlier. Revenue fell 31.3 per cent to $3.83 billion. Analysts on average had estimated a loss of 6 cents per share and revenue of $3.90 billion, according to Thomson Reuters I/B/E/S. Its shares were up 0.6 per cent in premarket trading.
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Abbott Laboratories, which is in the process of acquiring St. Jude Medical Inc, reported a nearly 3 per cent rise in quarterly sales, fueled by strength in its generic drug and medical device businesses. But its shares fell 1.6 per cent in premarket trading.
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Minneapolis-based U.S. Bancorp reported a 4.7 percent rise in quarterly revenue helped by strength in its mortgage banking unit and higher interest income.
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Reynolds American Inc. (RAI) on Wednesday reported third-quarter net income of $861 million. On a per-share basis, the Winston Salem, North Carolina-based company said it had profit of 60 cents. Earnings, adjusted for non-recurring costs, were 61 cents per share. The results fell short of Wall Street expectations. The average estimate of seven analysts surveyed by Zacks Investment Research was for earnings of 64 cents per share. But its share were up 0.06 per cent in premarket trading.
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Starbucks Corp. on Wednesday named its first chief executive officer for China and said it plans to more than double its store count in that country to 5,000 by 2021. Its share were up 0.55 per cent in premarket trading.
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Supermarket chain Supervalu matched forecasts with earnings of 10 cents per share, but revenue came up short due to weaker-than-expected sales at the retail level. Its shares fell 2.39 per cent in premarket trading.
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Earnings include: American Express Co.; Amphenol Corp.; BB&T Corp.; Canadian Pacific Railway Ltd.; Citrix Systems Inc.; Dover Corp.; eBay Inc.; Genuine Parts Co.; Halliburton Co.; Kinder Morgan Inc.; Mattel Inc.; Morgan Stanley; Mullen Group Ltd.; Reynolds American Inc.; Seagate Technology PLC; St. Jude Medical Inc.;
With files from wire services