The Dow is poised to hit its highest levels since 2007 this morning after a German constitutional court said "ja" (albeit with some buts) to a €500-billion bailout fund proceeding in Europe. Canadian stocks should also see a lot of green this morning, finding additional support from higher commodity prices. The Dow closed at its highest levels in nearly five years on Tuesday at 13,323.
The ruling, though not unexpected, came as a relief to the markets, with the euro hitting a four-month high $1.29017 (U.S.)
As the Globe's Eric Reguly reports, there were some conditions attached to the approval, notably setting a cap on Germany's ESM liability. The judges ruled that the €190-billion in German financial guarantees already approved by the German parliament could only be increased by another parliamentary vote. In effect, this limits taxpayers' exposure to a fund that is gearing up for more sovereign rescues.
The conditions are considered relatively benign.
On the data front overnight, there was some mildly positive news, with industrial production in the 17 countries sharing the euro rising 0.6 per cent in July from June. That's better than forecasts of economists polled by Reuters, who had expected no growth in the month.
Also overnight, China moved to prop up growth by saying it will pay export tax rebates faster and grant more loans to exporters, as well as increase export credit insurance to small companies.
Here in North America, the data cupboard is pretty empty, as the Federal Reserve begins a two-meeting meeting that will wrap up with its much-anticipated monetary policy statement Thursday. A majority of economists expect a third round of bond purchases and also expect the Fed to extend the duration of its zero-interest-rate policy into 2015, according to the latest Bloomberg survey.
The potential Fed action is no doubt at least already partly factored into markets now, so stocks are vulnerable to a nasty downturn if the Fed doesn't come through.
Here's the rundown of what else you need to know as the investing day gets underway.
MARKETS:
Equities:
Futures: Dow +0.4 per cent, S&P 500 +0.6 per cent, Nasdaq +0.6 per cent
Hong Kong's Hang Seng index +1.09 per cent
Shanghai Shenzhen CSI 300 +0.3 per cent
Japan's Nikkei +1.73 per cent
London's FTSE 100 +0.10 per cent
France's CAC 40 +0.59 per cent
Germany's DAX index +0.83 per cent
Commodities:
WTI (Nymex Oct) +0.85 per cent at $97.74 (U.S.) a barrel
Gold (Comex Dec) +0.63 per cent at $1,745.90 (U.S.) an ounce
Copper (Comex Dec) +0.53 per cent at $3.72 (U.S.) a pound
Currencies:
Canadian dollar down 0.0003, or 0.3 per cent, at 1.0269 (U.S.)
STOCKS AND ECONOMIC INDICATORS TO WATCH:
Chesapeake Energy said it is selling $6.9-billion in energy assets to repay debt. Shares are up 4 per cent in the pre-market.
Facebook stock is up 3 per cent in the pre-market after CEO Mark Zuckerberg told a tech conference late Tuesday that the company is poised to make a lot more money on mobile than it does on its core desktop-advertising business.
Dollarama has reported second-quarter earnings per share of 66 cents.
Texas Instrument shares may come under pressure today after the company in the post-market Tuesday narrowed its expected ranges for third-quarter earnings and revenue.
Apple is expected to unveil the new iPhone. Join our live blog starting at 1 p.m. (ET) for coverage of the launch presentation.
THIS MORNING'S TOP READS ON THE WEB:
10 expert takes on Facebook stock now that it's trading for less than half its IPO price
The S&P 500, already at multi-year highs, could easily take aim at 1500 before a significant retreat, some technical analysts say.
An oil forecasting tool that's acting up.
Why Zipcar is one of the cheapest stocks available and could even double or triple.
It's time to look seriously at Cisco as a dividend growth stock.
An interview with a contrarian investment manager who handily beat peers by buying newspapers and avoiding China
Darcy Keith