Skip to main content

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.

For the most part, world markets have stabilized overnight to digest yesterday's U.S. election related news and await more polls. Dow and S&P‎ futures are up slightly. Nasdaq futures are fluctuating after Facebook warned its revenue growth may slow and that advertisings role as a growth driver is likely to diminish, usually an omen of doom for high flying and high valued momentum stocks. Overseas the FTSE is down 0.5 per cent, the Dax is up 0.1 per cent and the Hang Seng closed down 0.6 per cent with Japan closed for a holiday. Crude oil stabilized with WTI holding just above $45 (U.S.).

Currency market action shows the U.S. dollar continuing to weaken ‎as Donald Trump gains in the polls. The Fed held rates steady yesterday and signalled toward a December rate increase. Although the number of hawkish dissenters dropped to two from three, but that was no big deal because the vote was driven more by political factors than economic factors. The decision suggests that the Fed still expects Clinton to win or that the reaction to a Trump win would be small and short (a complacent Fed could be in for a surprise on several counts, especially if the vote is close).

The biggest action today has been in the British pound which is staging a big rally this morning. ‎A U.K. High Court ruled that the government cannot unilaterally invoke Article 50 without a vote in Parliament. Traders saw this as potentially slowing or stalling the Brexit process, sending sterling up sharply and dragging on the FTSE, unwinding some of the trend that has dominated since the vote. This case is set now to go to the U.K. Supreme Court with hearings possible in early December.

The Bank of England maintained interest rates and quantitative easing (QE) at its meeting today in a 9-0 vote. Sterling has a second stage rally underway on the news as the tone from the central bank came out less hawkish than many had expected. The Bank's monetary policy committee (MPC) indicated that it has limited tolerance for above-market inflation (which means don't expect unlimited stimulus), it dropped any suggestions of another rate cut this year, and indicated that monetary policy can respond in either direction to changes in the economy and raised its 2016 GDP forecast to 2.2 per cent. Governor Mark Carney appears to have finally recognized that the U.K. economy is doing a lot better than he thought it would when he overreacted and hit the panic button last summer‎. Today U.K. Service PMI exceeded expectations building on yesterday's positive Construction PMI report.

In Canada today‎, on top of the usual broad influences like U.S. market action, energy and metal prices, earnings reports could influence trading in specific companies and sectors. It's a big day for results north of the border. Canadian Natural and EnCana beat the street by a country mile, suggesting that the energy sector may finally be turning the corner. SNC Lavalin and Magna International both reported earnings well above expectations, continuing a trend of generally positive earnings for Canadian companies this quarter. BCE was in-line while Gildan and Enbridge missed.

We also could see positioning ahead of Friday's U.S. and Canadian employment reports, and trading around U.S. service PMI and factory orders reports.

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 8:30 a.m. ET)

Dow +0.20 per cent; S&P 500 +0.18 per cent; Nasdaq: -0.01 per cent; TSX 60 +0.19 per cent

Equities
Japan's Nikkei -1.76 per cent
Shanghai composite index +0.84 per cent
Hong Kong's Hang Seng -0.56 per cent 
Germany's DAX +0.07 per cent
London's FTSE -0.54 per cent
France's CAC 40 +0.59 per cent

Commodities
WTI crude oil (Nymex Dec.) +0.97 per cent at $45.78 (U.S.) a barrel
Gold (Comex Dec.) -1.54 per cent at $1,288.00 (U.S.) an ounce
Copper (Comex Dec.) +0.04 per cent at $2.23 (U.S.) a pound

Currencies
Canadian dollar +0.03 at 74.68 cents (U.S.)
U.S. dollar index -0.06 at 97.35

Bonds
Canada 10-year bond yield +0.1552 at 1.18 per cent

KEY ECONOMIC RELEASES

Japan – markets closed
China Caixin services and composite PMI


England – Bank of England monetary policy announcement, minutes and quarterly inflation report (8 a.m. ET) followed by Governor Mark Carney's press conference (8:30 a.m.)

The Bank of England revised up its growth forecasts for the British economy on Thursday as it opted against another interest rate reduction in the wake of the country's decision to leave the European Union. Conceding that its earlier predictions over growth were too gloomy, the bank's policymaking Monetary Policy Committee kept its main interest rates at a record low 0.25 per cent. The announcement was widely expected following recent figures showing that Britain's economy grew by a forecast-busting quarterly rate of 0.5 per cent in the July-September period and signs of a marked pick-up in inflation. The vote was unanimous among the nine-member panel.

(8:30 a.m. ET) U.S. initial jobless claims for week of Oct. 29. Estimate is 255,000, down 3,000 from previous week.

More Americans applied for unemployment benefits last week, but jobless claims remain at levels that suggest most workers enjoy job security. The Labor Department said Thursday that claims for unemployment aid rose by 7,000 to a seasonally adjusted 265,000, highest since early August. Still, claims came in below 300,000 for the 87th straight week, longest such streak since 1970 when the workforce was much smaller. The less-volatile four-week average rose 4,750 to 257,750. Overall, 2.03 million Americans are collecting unemployment checks, fewest since June 2000 and down more than 7 per cent from a year earlier.


(8:30 a.m. ET) U.S. productivity and labour costs for Q3 (P). Consensus projections are annualized rate increases of 1.6 per cent  and 1.5 per cent, respectively.

The productivity of American workers rose in the July-September quarter at the fastest pace in two years, while labour costs slowed. Productivity increased at a 3.1 per cent rate in the third quarter, the Labor Department reported Thursday. It was a significant improvement from the previous three quarters when productivity had fallen. Unit labour costs edged up a modest 0.3 per cent in the third quarter, compared to a 3.9 per cent jump in the second quarter. The rise in productivity was the best showing since a 4.2 per cent gain in the third quarter of 2014.


(10 a.m. ET) U.S. factory orders for September. Consensus is an increase of 0.2 per cent from August.
(10 a.m. ET) U.S. non-manufacturing ISM for October. Consensus is 56.0, down from 57.1 in September.
(8:35 p.m. ET) Bank of Canada governor Stephen Poloz speaks in Oshawa at the Oshawa Walk of Fame.

KEY STOCKS TO WATCH

See also: Thursday's small-cap stocks to watch

**

BCE Inc., Canada's largest telecommunications company, reported marginally better-than-expected revenue on Thursday, helped by an increase in net postpaid subscribers. On an adjusted basis, the company earned 91 cents per share, in line with the average analyst estimate.

**

Canada's SNC-Lavalin Group Inc. reported an 11 per cent fall in quarterly revenue on Thursday due to weakness in its engineering and construction business. The company's net income attributable to shareholders fell to $43.3-million, or 29 cents per share, in the third quarter ended Sept. 30 from $224.2-million, or $1.49 per share, a year earlier. The year-earlier quarter included a gain of $145.7-million. Revenue fell to $2.17-billion from $2.43-billion.

**

Facebook shares are taking a beating, down 4.8 per cent in premarket trading, despite exceeding Street estimates in its latest quarter. Facebook reported adjusted quarterly profit of $1.09 per share, 12 cents a share above estimates. Revenue was also better than expected but investors are focusing on the company's warning of slowing revenue growth this quarter.

**

Qualcomm beat forecasts by 15 cents a share, with adjusted quarterly profit of $1.28 per share. The chipmaker's revenue also came in above Street forecasts. Its share are up 0.2 per cent in premarket trading.

**

Twenty-First Century Fox reported adjusted quarterly profit of 51 cents per share, exceeding estimates by seven cents a share. Revenue was in line with forecasts.

**

Canadian Natural Resources Ltd., Canada's largest independent petroleum producer, reported a bigger quarterly loss due to lower prices.

**

Canadian oil and natural gas producer Encana Corp. posted a quarterly profit, on an operating basis, as a steep fall in costs helped offset the impact of weak commodity prices. Its share are up 7.5 per cent in premarket trading in New York.

**

Canadian auto parts maker Magna International Inc. reported a better-than-expected quarterly profit, helped by strong demand from Asia and Europe.

**

UBS raised its target price on BRP Inc. to $26 from $22.

**

Canaccord Genuity raised its price target on Maple Leaf Foods to $36 from $35.

**

RBC raised its target price on Teck Resources to $35 from $30.

**

Fitbit sank 30 percent to $8.97 after the wearable fitness device maker's revenue forecast for the key holiday shopping quarter fell well below analysts' estimates.

**

Whole Foods Market rose 2.5 percent to $29.21 after the company said sales declines at established stores are easing.

**

First Solar fell 2.5 percent to $39.55 after it said a slide in panel price was harming bookings.

**

In a Securities and Exchange Commission filing, Wells Fargo said it has increased its litigation loss reserves to $1.7-billion from $1-billion. Its shares were down 0.3 per cent in premarket trading.

**
Church & Dwight, which makes Arm & Hammer baking soda and other consumer products, matched estimates, with earnings of 47 cents per share. Revenue missed forecasts, and its current-quarter guidance is also short of expectations.

**

Casino operator Wynn Resorts missed estimates by three cents a share, with adjusted quarterly profit of 75 cents per share, with revenue essentially in line. Its shares were down 3.9 per cent in premarket trading.

**

Chesapeake Energy reported an adjusted quarterly profit of nine cents per share, surprising analysts who had predicted a three cents per share loss. Revenue also beat forecasts. Its shares were up 7.2 per cent in premarket trading.

**

Whole Foods Market earned 28 cents per share for its latest quarter, compared to estimates of 24 cents a share. Revenue matched analysts' forecasts. The companyu also named founder John Mackey as its sole CEO as of Dec. 31. Mr. Mackey and Walter Robb have been co-chief executive officers, and Mr. Robb will remain on the board of directors and serve as a senior adviser. Its shares were up 3.5 per cent in premarket trading.

**

AIG reported adjusted quarterly profit of $1.23 per share for its latest quarter, two cents a share above estimates. Its shares were down 3.4 per cent in premarket trading.

**

Earnings include: 3D Systems Corp.; Activision Blizzard Inc.; adidas AG; Advantage Oil & Gas Ltd.; Agrium Inc.; Alliant Energy Corp.; Altus Group Ltd.; Argonaut Gold Inc.; AutoCanada Inc.; B2Gold Corp.; Ball Corp.; BCE Inc.; Bellatrix Exploration Ltd.; Blackpearl Resources Inc.; Bonavista Energy Corp.; Callaway Golf Co.; Callidus Capital Corp.; Canadian Natural Resources Ltd.; Canexus Corp.; Canyon Services Group Inc.; CBS Corp.; Ceres Global Ag Corp.; CI Financial Corp.; Cigna Corp.; Consolidated Edison Inc.; Crew Energy Inc.; Denison Mines Corp.; DREAM Unlimited Corp.; Echelon Financial Holdings Inc.; Enbridge Inc.; Enbridge Income Fund Holdings Inc.; Encana Corp.; Endeavour Silver Corp.; Fairfax Financial Holdings Ltd.; Finning International Inc.; Gartner Inc.; Genworth Financial Inc.; Genworth MI Canada Inc.; Gildan Activewear Inc.; goeasy Ltd.; GoPro Inc.; Great-West Lifeco Inc.; Halogen Software Inc.; Hyatt Hotels Corp.; Inter Pipeline Ltd.; Interfor Corp.; KP Tissue Inc.; Kraft Heinz Co.; Labrador Iron Ore Royalty Corp.; Liquor Stores NA Ltd.; Magna International Inc.; Martinrea International Inc.; Motorola Solutions Inc.; NeuLion Inc.; Newmarket Gold Inc.; Norsat International Inc.; Parkland Fuel Corp.; Pembina Pipeline Corp.; Premium Brands Holdings Corp.; Pulse Seismic Inc.; Raging River Exploration Inc..; Re/Max Holdings Inc.; Royal Gold Inc.; Royal Nickel Corp.; Saputo Inc.; Secure Energy Services Inc.; Sierra Wireless Inc.; SNC-Lavalin Group Inc.; Societe Generale Group; Starbucks Corp.; Strad Energy Services Ltd.; Stuart Olson Inc.; Symantec Corp.; Tahoe Resources Inc.; Timmins Gold Corp.; TMAC Resources Inc.; TMX Group Ltd.; Torex Gold Resources Inc.; Toscana Energy Income Corp.; Toscana Energy Income Corp.; Tree Island Steel Ltd.; Trilogy Energy Corp.; Turquoise Hill Resources Ltd.; TWC Enterprises Ltd.; Western Forest Products Inc.; Wi-LAN Inc.;  Xtreme Drilling Corp.

With files from wire service, CNBC.com

Interact with The Globe