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Before the Bell: Futures edge higher as oil prices gain

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 appears the initial reaction phase to Donald Trump's election win is reaching its conclusion with several markets pausing or correcting overextended moves. Now that traders have moved capital around on speculation, we may be heading toward a show-me phase.

U.S. index futures are up 0.1 per cent to 0.2 per cent  with the Nasdaq outperforming as is tries to catch up after lagging lately.  Crude oil is also bouncing back today with WTI up 3 per cent and moving back closer to $45.

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The big rally in the U.S. dollar has paused for now. Gold has started to rebound from Monday's early washout. The yen, euro, Canadian dollar and other resource currencies have also rebounded. The pound is a bit soft following weaker than expected U.K. inflation figures and a neutral outlook from Bank of England Governor Mark Carney as the U.K. economy has improved since August. The FTSE is up 0.5 per cent on the news.

The U.S. dollar could be active again as a big week for Fed member speeches continues.‎ With Fed Funds pricing in a 90-per-cent-plus chance of a December rate hike, traders are more interested in the outlook for future moves. The rally in the U.S. Dollar Index from 95 to 100 suggests expectations for rate hikes have gone from two over the next year to four. Richmond Fed President Jeffrey Lacker, for example, has indicated that more fiscal stimulus would enable the Fed to normalize interest rates more quickly. Today Fed Vice Chair Stanley Fischer is speaking again, along with Boston Fed President Eric Rosengren, and Governor Daniel Tarullo, all of whom are voters this year.

In his speech early today, Mr. Rosengren said that only "significant negative news" could derail the Federal Reserve's high expectations for raising U.S. interest rates next month.

Today ‎also brings the monthly U.S. retail sales report which may have been distorted by the election campaign. Home Depot reported stronger than expected earnings and same store sales which could attract attention today.

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 9:00 a.m. ET)

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Dow +0.05 per cent; S&P 500 +0.22 per cent; Nasdaq: +0.69 per cent; TSX 60 +0.20 per cent

Equities
Japan's Nikkei -0.03 per cent
Shanghai composite index -0.11 per cent
Hong Kong's Hang Seng +0.46 per cent 
Germany's DAX +0.06 per cent
London's FTSE +0.46 per cent
France's CAC 40 +0.13 per cent

Commodities
WTI crude oil (Nymex Dec.) +3.05 per cent at $44.64 (U.S.) a barrel
Gold (Comex Dec.) +0.25 per cent at $1,224.70 (U.S.) an ounce
Copper (Comex Dec.) -1.79 per cent at $2.48 (U.S.) a pound

Currencies
Canadian dollar +0.17 at 73.93 cents (U.S.)
U.S. dollar index -0.23 at 99.88

Bonds
Canada 10-year bond yield -2.95 at 1.51 per cent

KEY ECONOMIC RELEASES

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Euro Area real GDP and trade surplus
Germany real GDP and ZEW Survey

(8:30 a.m. ET) Canada new motor vehicle sales for September. The estimate is a decline of 0.5 per cent year over year.


(8:30 a.m. ET) U.S. retail sales for October. The consensus projection is an increase of 0.6 per cent from September. Excluding automobiles, a rise of 0.5 per cent is expected.

U.S. retail sales rose more than expected in October as households bought motor vehicles and a range of other goods, pointing to sustained economic strength that could allow the Federal Reserve to raise interest rates next month. The Commerce Department said on Tuesday retail sales increased 0.8 percent last month, also boosted by demand for building materials likely as households cleaned up and made repairs in the wake of Hurricane Matthew.


(8:30 a.m. ET) U.S. import prices for October. Consensus is a rise of 0.4 per cent from September and a decline of 0.3 per cent year over year.

U.S. import prices rose for a second straight month in October as the cost of petroleum and motor vehicles increased, but persistent dollar strength continued to keep underlying imported inflation subdued. The Labor Department said on Tuesday import prices increased 0.5 percent last month after an upwardly revised 0.2 percent gain in September. It was the second straight month of gains. Economists polled by Reuters had forecast import prices rising 0.4 percent last month after a previously reported 0.1 percent increase.


(8:30 a.m. ET) U.S. Empire State Manufacturing Survey for November.


(9:30 a.m. ET) Canada existing home sales and average prices for September. The analyst estimate is year-over-year increases of 2.0 per cent and 6.0 per cent, respectively.


(9 a.m. ET) Canada MLS Home Price Index for October. Estimate is an increase of 14.0 per cent year over year.

Canadian home prices rose in October from a month earlier as prices continued to soar in Ontario, while Vancouver prices fell for the first time in almost two years, the Teranet-National Bank Composite House Price Index showed on Tuesday. The index, which measures price changes for repeat sales of single-family homes, showed national home prices rose 0.3 percent last month from September. Prices were up 11.8 percent from a year earlier.

(10 a.m. ET) U.S. business inventories for September (final). Estimate is an increase of 0.2 per cent from the previous month.

KEY STOCKS TO WATCH

Also see: Tuesday's small-cap stocks to watch

Canada's Lundin Mining Corp. said it would sell its indirect stake in TF Holdings Ltd. to an affiliate of Chinese private-equity firm BHR Partners for about $1.14-billion in cash. Bermuda-based TF Holdings owns an 80 per cent interest in Tenke Fungurume Mining SA. Lundin owns an indirect 30 per cent stake in TF Holdings, resulting in an effective 24 per cent interest in Tenke.

**

One of Canada's most promising startups in the emerging industrial-Internet-of-things (IIoT) space, Vancouver-based Bit Stew Systems Inc., has been purchased by General Electric Co. in a deal to be announced Tuesday that is valued at $153-million (U.S.).

**

Home Depot rose 1.8 percent to $130 in premarket trading after the No. 1 U.S. home improvement chain reported better-than-expected results for the third quarter. It reported quarterly earnings of $1.60 per share on revenue of $23.2 billion, both above Wall Street estimates. Same-store sales, a key measure for retail firms, rose 5.5 percent in the third quarter, also beating forecast.

**

JD.com was up 4.6 percent at $24.80 after China's second-largest e-commerce firm's third-quarter revenue beat analysts' expectations. It reported third-quarter revenue growth of 38 percent year-over-year and posted fourth-quarter sales guidance that could end a recent trend in slowing growth.

**

American Airlines, Delta Air Lines, and United Continental Holdings were up between 3.3 percent and 4.5 percent, a day after Warren Buffett's Berkshire Hathaway said it had bought shares in the airlines. CNBC has also learned that Berkshire took a stake in Southwest Airlines. Stocks of the airlines moved higher in premarket trading.

**

While Mr. Buffett was buying airlines recently, he was selling his holdings in Suncor Energy Inc.  According to filings with the U.S. Securities and Exchange Commission, Buffett's Berkshire Hathaway no longer holds any shares in the Canadian energy company. The quarterly regulatory filing lists his investments as of Sept. 30.

**

Analysts at RBC Capital Markets upgraded motorcycle maker Harley-Davidson's  stock to "sector perform" from "underperform" and raised their price target to $57 from $46, saying its "potential for growth looks improved."

**

Car automation company Mobileye reported better-than-expected sales and profits for its third quarter, with CEO Ziv Aviram citing a strong performance from its core business. Its shares were down 1 per cent in premarket trading.

**

Teva Pharmaceutical Industries reported mixed quarterly results, beating estimates on the bottom line, while missing on sales. The firm said its revenue grew 15 percent because of a $40.5 billion acquisition of Allergan's generic drug business in August. Its shares were down 2.8 per cent in premarket trading.

**

Analysts at Stifel downgraded FedEx to "hold" from "buy," citing challenges from FedEx's acquisition of TNT Express earlier this year. Its shares were down 0.46 per cent in premarket trading.

**

Dick's Sporting Goods posted better-than-expected sales and earnings on the back of strong same-store sales. Dick's reported comparable-store sales growth of 5.2 percent, easily beating an estimate of 2.8 percent. Its shares were down 3.14 per cent in premarket trading.

**

U.S. cigarette maker Reynolds American rejected a $47 billion takeover bid from British American Tobacco, seeking a higher price from its competitor. Its shares were up 0.38 per cent in premarket trading.

**

Earnings include: Agilent Technologies Inc.; Aramark; Dick's Sporting Goods Inc.; Home Depot Inc.; JD.Com Inc.; TJX Companies Inc.; Vodafone Group PLC

With files from wire services, cnbc.com, marketwatch.com

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