Stock futures are pointing to some decent gains at the North American open this morning, as traders are generally in a cheerful mood after Friday's stronger-than-expected U.S. jobs report.
The data suggested the U.S. economy is picking up the pace in its recovery, though unemployment levels are still high enough to warrant ongoing stimulus measures from the Federal Reserve.
More clues on what the Fed's next steps may be will come Wednesday, when the Federal Open Market Committee publishes minutes from its meeting last month and Ben Bernanke is scheduled to talk. Equity markets have come under significant stress, and long-term bond yields have been spiking, ever since he suggested on June 19 that the central bank may taper its bond-buying program later this year and end it in mid-2014 if economic growth meets the Fed's targets.
The sharp market reaction to Mr. Bernanke's comments from last month may have taken the Fed by surprise, with several officials since then cautioning that stimulus measures and low interest rates aren't going away anytime soon. The events this Wednesday should shed further light on the matter.
Today marks the start of the corporate earnings season in the U.S., with Alcoa due to report second-quarter results after the bell. Overall, earnings for the quarter are expected to be lacklustre, as many S&P 500 companies recently scaled back their earnings forecasts for the period.
Analysts are expecting earnings for companies in the index to rise 3 per cent compared to a year earlier, according to a survey by S&P Capital IQ. As recently as April 1, they predicted earnings would rise nearly 7 per cent.
That said, companies have a habit of lowering the bar on their earnings guidance, only to surpass them when results are officially released. Last quarter, 65 per cent of firms beat Street estimates, for instance.
Meanwhile, the loonie will be in focus this morning. It slipped to as low as 94.46 (U.S.) early this morning, near its lowest level in three years, but has since retraced some of those losses against the greenback.
Now, here's a closer look at what's going on this morning and what's to come.
MARKETS:
Equities:
Futures: S&P 500 +0.6 per cent; Dow +0.5 per cent; Nasdaq +0.6 per cent; TSX Toronto +0.4 per cent
Hong Kong's Hang Seng -1.31 per cent
Shanghai composite index -2.45 per cent
Japan's Nikkei -1.40 per cent
London's FTSE 100 +1.07 per cent
Germany's DAX +2.23 per cent
France's CAC 40 +1.87 per cent
Commodities:
WTI crude oil (Nymex Aug) -0.23 per cent at $102.98 (U.S.) a barrel
Gold (Comex Aug) +1.47 per cent at $1,230.50 (U.S.) an ounce
Copper (Comex Sep) +0.39 per cent at $3.08 (U.S.) a pound
Currencies:
Canadian dollar down 0.0039, or 0.41 per cent, at $0.9468 (U.S.)
U.S. dollar index down 0.10 at 84.34
Bonds:
U.S. 10-year Treasury yield 2.71 per cent, up 0.21
Canada 10-year government bond yield 2.55 per cent, up 0.13
ECONOMIC INDICATORS TO WATCH:
Statistics Canada said the value of building permits rose 4.5 per cent in May, following an upwardly revised increase of 11.2 per cent in April. Economists were looking for permits to drop 5 per cent.
STOCKS TO WATCH:
Alcoa Inc. to report second-quarter results. The Street is expecting earnings of 6 cents a share on revenue of $5.85-billion.
Other earnings include Niko Resources Ltd.
Priceline.com shares are up nearly 2 per cent in the premarket after Morgan Stanley upgraded the company to "overweight."
Barrick Gold Corp. shares are up 2.3 per cent in the premarket after the stock hit fresh multi-year lows on Friday.
THIS MORNING'S TOP INVESTING READS ON THE WEB:
Pimco is losing its appetite for Canadian provincial bonds.
Why the upcoming earnings season may not be as gloomy as all the profit warnings may lead an investor to believe.
Bullish sentiment is spiking among Individual investors.
Thomson Reuters said it would suspend its early provision to a small group of clients of the widely watched Thomson Reuters/University of Michigan consumer sentiment data at the request of the New York Attorney General.
10 educated guesses on what the second half of the year will bring.
Two reasons why the market should make new highs later this year.
How to profit from ETF pricing errors.
Dennis Gartman has turned bullish on gold.
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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. You can also be notified using our dashboard feature when new articles appear from this author. Read more on using this feature here.
Darcy Keith