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Premarket: Stocks set to extend rally, Nikkei surges

The S&P 500 looks set to extend a two-month high this morning as optimism remains largely intact that U.S. negotiators will be able to reach some kind of agreement to at least blunt the impact of the "fiscal cliff" of tax hikes and spending cuts set for Jan. 1.

S&P 500 and Dow Jones industrial average stock index futures are slightly positive this morning, and gold and oil are also on the rise, suggesting the TSX -- which closed at a one-week high on Tuesday -- will see modest gains at the open.

Overnight, Christmas came early in Japan, where the Nikkei surged 2.39 per cent and catapulted over the 10,000-point mark for its highest close since early April. Financial and exporter shares led the rally, which was ignited by Wall Street's gains on Tuesday and hopes for a resolution to the U.S. budgetary discussions.

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Both the Republicans and Democrats showed some flexibility this week on the issue of income thresholds that would be subject to more taxation. Republican House Speaker John Boehner also reportedly has a "Plan B" in mind that would increase taxes on incomes of $1-million and above, though it was met with a chilly reception by Democrats. Overall, the parties do appear much closer to a deal than just a few days ago, but there are concerns negotiations may still fail.

European stocks posted modest gains overnight as the German IFO business confidence survey came in better than expected, rising to 102.4 in December from 101.4 in November.

Now, here's a look at what else you need to know this morning.

MARKETS:

Equities:

U.S. futures: S&P 500 +0.3 per cent; DJIA +0.3 per cent; Nasdaq unchanged

Hong Kong's Hang Seng index +0.57 per cent

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Shanghai composite index -0.02 per cent

Japan's Nikkei +2.39 per cent

London's FTSE 100 +0.54 per cent

Germany's DAX +0.20 per cent

France's CAC 40 +0.45 per cent

Commodities:

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WTI (Nymex Feb) +0.58 per cent at $88.18 (U.S.) a barrel

Gold (Comex Feb) +0.07 per cent at $1,699.40 (U.S.) an ounce

Copper (Comex Mar) -0.19 per cent at $3.66 (U.S.) a pound

Currencies:

Canadian dollar down 0.0007, or 0.07 per cent, at 1.0132 (U.S.)

ECONOMIC INDICATORS TO WATCH:

Statistics Canada said wholesale trade rose 0.9 per cent in October from September, ahead of forecasts calling for a gain of 0.5 per cent.

The U.S. Commerce Department said housing starts fell 3 per cent to a seasonally adjusted annual rate of 861,000 in November, below forecasts for 875,000 starts. Building permits came in at 899,000, ahead of forecasts of 875,000.

Teranet-National Bank's house price index for Canada fell 0.4 per cent in November from October but was up 3.3 per cent from a year earlier.

STOCKS TO WATCH:

General Motors said it will spend $5.5-billion (U.S.), or $27.50 per share, to buy back 200 million shares of its stock from the U.S. government. The government also plans to sell its remaining stake in the automaker within the next 12 to 15 months. Shares in GM soared nearly 8 per cent in the premarket to $27.52.

FedEx Corp. profit fell 11.9 per cent in the second quarter, less than investors had feared, as the company struggled to improve demand at its air freight business. It maintained its forecast for the full fiscal year ending in May. Shares are up nearly 1 per cent in the premarket.

Oracle Corp. is up 2 per cent in premarket trading after the software developer reported better-than-expected second-quarter earnings late Tuesday.

Alcoa shares could be under pressure after Moody's Investors Service placed the aluminum producer under review for a downgrade amid low prices for the metal.

Knight Capital Group has confirmed a deal that will see it be acquired by Getco for $3.75 a share in cash.

Earnings today include: Accenture PLC; Bed Bath & Beyond Inc.; General Mills Inc.; Navistar International Corp.

THIS MORNING'S TOP INVESTING READS ON THE WEB:

Top 10 U.S. dividend stocks from Morningstar's ultimate stock pickers.

Hedge funds haven't been this invested in stocks since 2006.

U.S. bank stocks offer some of the best opportunities for investors in years, with Bank of America and others poised to post double-digit gains, according to Meredith Whitney, who correctly forecast the U.S. housing bust.

Global fund managers are more bullish about economic growth than they have been in nearly two years, and they are particularly optimistic about China.

A recessionary red flag is being raised after U.S. imports fell for two months in a row in the U.S. It's a rare event.

Consumers have long been asked to confirm their online purchases, but now Google is asking them to also confirm the ads they click on.

Corporate insiders in the U.S. are no longer on the side of the bulls.

What the charts are saying for natural gas.

Apple's valuation metrics are much lower than other companies that have $500-billion market caps.

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The premarket report is constantly updated to reflect the latest news developments and market moves. For instant headlines on breaking economic and corporate news in the premarket, follow Darcy Keith on Twitter at @eyeonequities

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About the Author
Investment Editor

Darcy Keith is The Globe and Mail's Investment Editor. He has been a business journalist since 1992 and joined the Report on Business in 2010 from Yahoo! Canada, where he was the senior editor of finance. More

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