Markets are taking an optimistic stance this morning on the still unresolved bailout efforts involving Cyprus, hoping that policy makers will come up with another solution after its parliament Tuesday rejected a controversial tax on bank deposits.
Investors are also positioning themselves for today's Federal Reserve policy announcement by assuming Chairman Ben Bernanke will offer supportive words on markets and the need to keep in place the central bank's ultra-easy monetary policy.
U.S. stock futures are higher this morning and are picking up further steam as the open approaches. Oil and copper are recovering some of their losses from earlier this week, which should help the TSX to open with some modest gains at the open as well.
The TSX should also get a boost from another rally in shares of Research In Motion. In the premarket, RIM shares are up about 6 per cent after Morgan Stanley upgraded the stock by two notches to "overweight" and raised its price target to $22 (U.S.) from $10. It cited encouragement over expanding gross margins and higher average selling prices as the company transitions to its BB10 devices.
The European Central Bank now has to decide whether to give Cyprus more time to meet bailout requirements, or consider cutting off support to the nation's banks. The ECB's Governing Council meets today in Frankfurt, and Luxembourg Finance Minister Luc Frieden today called for the 17 euro-area finance ministers to reconvene to consider a new rescue package. The levy on personal bank deposits, which sparked outrage among its population and ignited global market fears of a spreading banking crisis, was rejected on Tuesday and effectively killed the previous bailout plan. Cyprus's finance minister is now pleading with Russia for financial aid.
Given that a bank levy now seems out of the picture, calming fears of bank runs in other, larger European nations, the bigger focus today may very well turn to Mr. Bernanke. Market players are betting that he'll offer a tepid economic outlook that won't suggest the need for any immediate withdrawal of its quantitative easing program and super low interest rates. Fed officials have suggested recently that the labour market is still too weak to alter current monetary policy - and recent employment reports suggest a less-than-robust jobs picture in the country.
Meanwhile, Asia saw some strong gains overnight, especially in China, as investors did some bargain hunting for banks and property developers that had fallen hard in recent sessions.
Now, here's a closer look at what else is going on this morning and what's to come.
MARKETS:
Equities:
U.S. futures: S&P 500 0.0 +0.6 per cent; Dow +0.5 per cent; Nasdaq +0.8 per cent
Hong Kong's Hang Seng index +0.97 per cent
Shanghai composite index +2.64 per cent
Japan's Nikkei (Close for holiday)
London's FTSE 100 +0.18 per cent
Germany's DAX +0.86 per cent
France's CAC 40 +1.15 per cent
Italy's FTSE MIB +1.16 per cent
Commodities:
WTI (Nymex May) +0.90 per cent at $93.00 (U.S.) a barrel
Gold (Comex Apr) -0.04 per cent at $1,610.80 (U.S.) an ounce
Copper (Comex May) +1.04 per cent at $3.44 (U.S.) a pound
Currencies:
Canadian dollar up 0.0023, or 0.24 per cent, at $0.9760 (U.S.)
ECONOMIC INDICATORS TO WATCH:
(2 p.m. ET) The U.S. Federal Reserve Board makes its interest rate announcement. Economists expect the benchmark rate to be left unchanged at 0.25 per cent. News conference to follow.
STOCKS TO WATCH:
FedEx Corp. reported a worse-than-expected quarterly profit due to weakness in its air express business. Excluding items, FedEx earned $1.23 per share, missing Street forecasts for $1.38. Revenues rose 4 per cent to $11-billion, modestly beating forecasts. Shares are down 3 per cent in the premarket.
Valeant Pharmaceuticals International Inc. has struck an agreement to acquire skin-care company Obagi Medical Products Inc. for more than $300-million (U.S.).
Adobe Systems Inc. shares are up 5 per cent in the premarket after late Tuesday reporting better-than-expected earnings and sales.
Apple Inc. shares are up 0.3 per cent in the premarket. Canaccord Genuity this morning cut its price target by $50 to $600 (U.S.) but reiterated a "buy" rating. It said Apple could lose "meaningful" near-term market and profit share because of new Android devices.
Research In Motion Ltd. shares are up 6 per cent after Morgan Stanley upgraded the BlackBerry maker two notches from "underweight" to "overweight" and boosted its price target to $22 from $10 (U.S.)
Other earnings today include: General Mills Inc.; Lennar Corp.; New Flyer Industries Inc.; and Oracle Corp.
THIS MORNING'S TOP INVESTING READS ON THE WEB:
Blackrock's CEO says Cyprus is not a major problem for markets and predicts U.S. equities will rise a further 20 per cent this year.
Why investors should be on Twitter.
Indian gold funds are shrinking for the first time since June as investors in the biggest bullion- consuming nation follow billionaire George Soros in pulling money from products backed by the precious metal.
Earthquakes and the mind-bending laws of markets.
How have markets performed in the 5th year of a bull run? This chart has some answers.
What to do when your emotions rise or fall with the stock market.
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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
Darcy Keith