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Before the Bell: TSX to open lower as oil slide continues

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.

Global markets continue to stabilize and digest the big repositioning moves of the last week. U.S. index futures, the Hang Seng, the FTSE, and the Dax are all down 0.3 per cent to 1.2 per cent this morning. ‎The Nikkei rallied another 1.0 per cent on further weakness of the yen.

Crude oil came under pressure overnight again, falling 1.4 per cent and taking West Texas Intermediate back closer to $45. So far, this appears to be a normal trading correction of yesterday's huge 5 per cent rally sparked by a 3.6-million-barrel (mmbbl ) increase in U.S. American Petroleum Institute inventories, which was more than expected. Oil may remain active through today's weekly Department of Energy (DOE) inventories. Into the afternoon focus may start to move back to OPEC speculation from U.S. fundamentals.

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The pullback in oil has dragged on the Canadian dollar a bit but not more than the general pullback in major currencies like gold,  the euro and British pound on U.S. dollar gains. ‎St. Louis Fed President James Bullard, currently an ultra dove, thinks one rate hike will be enough to take the Fed to neutral. Note, however, that after the December meeting he will not have a vote for two years and a lot can change over that time.

The U.S. dollar hit a 14-year high against a basket of currencies in early trading today as a post-U.S. election sell-off resumed across global bond markets, lifting Treasury yields and attracting investors to the U.S. currency.

Overall, traders continue to almost universally expect a December rate increase. Traders may look to another busy day for Fed speakers for an indication of how many rate hikes to expect next year with 2017 regional voters Patrick Harker, president of the Federal Reserve Bank of Philadelphia and Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, speaking.

Earnings may also continue to attract attention today. Loblaw and Agilent beat the Street overnight while Lowes missed badly.

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)

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Dow -0.35 per cent; S&P 500 -0.44 per cent; Nasdaq: -0.42 per cent; TSX 60 -0.24 per cent

Equities
Japan's Nikkei +1.10 per cent
Shanghai composite index -0.05 per cent
Hong Kong's Hang Seng -0.19 per cent 
Germany's DAX -1.02 per cent
London's FTSE -0.73 per cent
France's CAC 40 -1.20 per cent

Commodities
WTI crude oil (Nymex Dec.) -1.35 per cent at $45.19 (U.S.) a barrel
Gold (Comex Dec.) -0.10 per cent at $1,223.30 (U.S.) an ounce
Copper (Comex Dec.) -0.86 per cent at $2.48 (U.S.) a pound

Currencies
Canadian dollar -0.18 at 74.08 cents (U.S.)
U.S. dollar index +0.0.27 at 100.50

Bonds
Canada 10-year bond yield +2.81 at 1.56 per cent

KEY ECONOMIC RELEASES

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(8:30 a.m. ET) Canada manufacturing sales and new orders for September. The estimates are a rise of 0.1 per cent and unchanged, respectively, from August.

Statistics Canada says manufacturing sales rose 0.3 per cent to $51.5 billion in September, boosted by higher sales in the transportation equipment and fabricated metal industries. Economists had expected a gain of 0.1 per cent, according to Thomson Reuters. Sales were up in 12 of 21 industries, representing 70.1 per cent of the total manufacturing sector. Sales in constant dollar terms sales slipped 0.2 per cent, indicating a lower volume of goods sold.


(8:30 a.m. ET) U.S. PPI Final Demand for October. Consensus is an increase of 0.3 per cent from September and a rise of 1.2 per cent year over year. Excluding food and energy, the consensus projections are increases of 0.2 per cent and 1.6 per cent, respectively.

U.S. producer prices were unexpectedly flat in October as a rise in the cost of goods was offset by declining services costs. The Labor Department said on Wednesday that the unchanged reading in its producer price index for final demand last month followed a 0.3 percent increase in September. In the 12 months through October, the PPI increased 0.8 percent, the biggest gain since December 2014. That followed a 0.7 percent rise in September. Economists polled by Reuters had forecast the PPI rising 0.3 percent last month and accelerating 1.2 percent from a year ago.

(9:15 a.m. ET) U.S. industrial production and capacity utilization for October. Consensus projections are a rise of 0.2 per cent and 75.5 per cent (up 0.1 per cent) from September, respectively.
(10 a.m. ET) U.S. NAHB Housing Market Index for November. Consensus is unchanged from October.
(10:30 a.m. ET) EIA petroleum status report
(11:50 a.m. ET) Bank of Canada deputy governor Timothy Lane speaks in Waterloo, Ont., at the Centre for International Governance Innovation.
(4 p.m. ET) U.S. new Treasury International Capital flows for September.

KEY STOCKS TO WATCH

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

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Target Corp. was up 7.6 percent at $76.89 in premarket trading after the retailer's third-quarter profit rose. Target reported a higher-than-expected quarterly profit and raised its fiscal-year forecast after benefiting from a strong back-to-school shopping season and higher online sales. The retailer beat estimates by 19 cents a share, with adjusted quarterly profit of $1.04 per share. Revenue was above forecasts, as well.

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Lowe's fell as much as 5.1 percent to $65.50 after the No. 2 U.S. home improvement chain cut its full-year profit forecast for the second time. Lowe's earned an adjusted 88 cents per share for the third quarter, missing estimates by eight cents a share. Revenue was also below forecasts. Same-store sales rose 2.7 percent, falling short of the Thomson Reuters consensus estimate of a 2.9 percent increase.

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Agilent Technologies was up 2 per cent in premarket trading after posting earnings that beat the Street, however its outlook was below consensus.

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Grocery store chain Metro Inc.  reported a 10 per cent increase in its fourth-quarter profit compared with a year ago. The Montreal-based company says it earned $145.0 million or 60 cents per diluted share for the 12 weeks ended Sept. 24.

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Grocery and pharmacy retailer Loblaw Cos Ltd. reported a 25.5 per cent rise in quarterly profit, helped by a drop in expenses and improved performances by its financial services and property businesses. Adjusted net earnings attributable to shareholders rose to $512-million, or $1.26 per share, in the third quarter ended Oct. 8, from $408-million, or 98 cents per share, a year earlier. Revenue rose 1.4 per cent to $14.14-billion due to lowered prices.

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Dundee Corp. has decided to remain a key stakeholder in its struggling capital markets business and inject money back into the unit – a move that has taken some observers by surprise, reports The Globe's Niall McGee. In a regulatory filing on Monday night, Dundee said it intends to inject capital via subordinated debt into Dundee Securities Ltd. that would match the amount its employees will contribute in the form of equity. Dundee Securities is currently fully owned by Dundee Corp. Dundee did not specify the amount of the new capital infusion, but two sources close to the company said the figure will be roughly $17-million. In the filing, Dundee said the debt will be in the form of a revenue-based royalty.

**

Deutsche Bank upgraded Walt Disney to "buy" from "hold," with a price target of $112 per share. Deutsche Bank said it now has more confidence in Disney's projection of a return to double-digit earnings growth in 2018. Its shares were up 0.9 per cent in premarket trading.

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Credit Suisse cut yoga wear maker Lululemon's stock to "neutral" from " outperform," citing an increase in "markdown intensity" among other factors. Its shares were down 2.3 per cent in premarket trading.

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Pacific Crest upgraded Fitbit, the maker of wearable fitness devices, to "sector weight" from "underweight." The firm said the stock now more fully reflects the skepticism that it expressed in its late September downgrade, which mentioned the maturing of the market providing additional headwinds for Fitbit. Its shares were up 2.7 per cent in premarket trading.

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Baird downgraded Bank of America, Capital One, and Fifth Third bank stocks -- to "neutral" from "outperform" for BofA and Capital One, to "underperform" from "neutral" for Fifth Third. Baird said the rally in financial stocks after the election has already built in the potential benefits from rising interest rates and lower tax rates.

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Apparel retailer The Gap named Teri List-Stoll as chief financial officer effective Jan. 17. List-Stoll was previously CFO at Dick's Sporting Goods and Kraft Foods. The company had announced the departure of current CFO Sabrina Simmons earlier this month.

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Square CEO Jack Dorsey has filed a plan to sell up to seven percent of his shares in the mobile payments company in the next 12 months, with Dorsey planning to use the funds for financial and tax planning, as well as funding his Start Small Foundation. Its shares were up 0.6 per cent in premarket trading.

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Earnings include: Cisco Systems Inc.; L Brands Inc.; Loblaw Companies Ltd.; Lowe's Companies Inc.; Metro Inc.; Progressive Corp.; Target Corp.

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

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