Jennifer Dowty
Jennifer Dowty, Chartered Financial Analyst, writes exclusively for Globe Unlimited subscribers. The Before the Bell report is updated throughout the premarket to reflect latest developments.
A very warm Wednesday morning to you.
Tis the season to spread good cheer so let's start off with some positive news. North American futures are up sharply, and it looks like the S&P/TSX composite index may close with gains for the fourth consecutive day.
In the U.S., Dow futures are up 89 points or 0.5 per cent, S&P 500 futures are up 9 points or 0.4 per cent, and Nasdaq futures are up 20 points, or 0.4 per cent. In Canada, the S&P/TSX 60 index futures are up 6 points.
As oil goes, so does the markets, this trend seem to remain in effect – at least for now. This morning, oil prices are up for a third consecutive day with the North American oil benchmark, West Texas Intermediate (WTI) oil futures now at parity with Brent oil futures. WTI is trading above Brent for the first time in four years. WTI oil futures are up 52 cents, over 1 per cent, to $36.66 (U.S.) driven higher by a positive report released on Tuesday by the American Petroleum Institute, which showed a large drawdown in oil inventories, suggesting that the supply/demand imbalance may slowly correct and not worsen. Later this morning, at 10:30 a.m. (EST), the U.S. Energy Information Administration releases its weekly oil inventory report, which could lead to further intra-day volatility for the commodity price and the markets. Natural gas futures are up 3 cents, or 1.8 per cent to $1.92.
Overnight in the Pacific Rim, markets moves were modest. In China, the Shanghai composite declined 0.4 per cent. In Hong Kong, the Hang Seng advanced 1 per cent. The Australian ASX 200 was up half a per cent, for the sixth consecutive day of positive returns. In Japan, the Nikkei 225 was closed as it was a market holiday for the Emperor's birthday.
All major European markets have solid gains during this trading session. The German DAX is up 1.9 per cent, the French CAC is up 2.1 per cent, and the London FTSE is up 2.2 per cent. The rally is broad based, even beaten down mining stocks are participating in the rally. In economic news, U.K. third-quarter gross domestic product (GDP) was revised down a tad from what was previously reported to 0.4 per cent quarter-over-quarter from 0.5 per cent. On a year-over-year basis, the economy grew by a solid 2.1 per cent. In France, reported third-quarter GDP was in-line with expectations at 0.3 per cent quarter-over-quarter, rising 1.1 per cent year-over-year.
Here's the bottom line. The Santa Claus rally traditionally occurs from the final five trading days of the year until the first two trading days of the new year, and today we kick off this period with just five trading days left in 2015. We shall see if this holiday tradition continues in 2015.
Before the bell will return on Monday. To all readers, wishing you Happy Holidays and a Merry Christmas.
MARKET DATA:
Futures
S&P 500 +0.4 per cent; Dow +0.5 per cent; Nasdaq: +0.4 per cent
Equities
Hong Kong's Hang Seng +0.96 per cent
Shanghai composite index -0.43 per cent
Japan's Nikkei market holiday - CLOSED
London's FTSE +2.2 per cent
Germany's DAX +1.9 per cent
France's CAC 40 +2.1 per cent
Commodities
WTI crude oil (Nymex Feb) +1.4 per cent at $36.66 (U.S.) a barrel
Gold (Comex Feb) -0.1 per cent at $1,072.80 (U.S.) an ounce
Copper (Comex Mar) +0.50 per cent at $2.12 (U.S.) a pound
Currencies
Canadian dollar -0.0004 at 71.80 cents (U.S.).
Euro -0.0033 at 1.0924 (U.S.)
Bonds
U.S. 2-year Treasury yield 0.969 per cent
U.S. 10-year Treasury yield 2.248 per cent
ECONOMIC RELEASES
United States
8:30 a.m. (EST) November Durable Goods Orders was unchanged, at 0 per cent. Consensus -0.6 per cent. Prior +2.9 per cent.
10 a.m. (EST) November New Home Sales. Consensus 505,000. October's seasonally adjusted annual rate was 495,000.
10 a.m. (EST) December Final University of Michigan Consumer Sentiment Index. Preliminary reading reported was 91.8.
Canada
8:30 a.m. (EST) October gross domestic product came in relatively in-line with expectations at 0 per cent month-over-month and down 0.2 per cent year-over-year.
8:30 a.m. (EST) October retail sales were slightly weaker-than-expected at 0.1 per cent month-over-month compared to forecasts of 0.4 per cent expected month-over-month. Sales gains were seen at clothing, footwear, jewellery, luggage and leather goods stores. However, there were areas of weakness with sales declines at supermarkets, convenience stores, and beer, wine, and liquor stores.
CORPORATE EARNINGS RELEASES
United States
NIKE (NKE-NYSE) reported better-than-expected second quarter fiscal 2016 results. Revenues increased 4 per cent year-over-year. The company reported earnings per share of 90 cents, up 22 per cent year-over-year. In addition, the company indicated that future orders increased 20 per cent.
Canada
No companies in the S&P/TSX composite index are reporting
ANALYSTS' ACTIONS
Calfrac Well Services (CFW-TSX). The analyst at RBC Capital Market maintained his sector perform recommendation but reduced his price target to $2.50 from $3.
QUOTE OF THE DAY
"We judge ourselves by what we feel capable of doing, while others judge us by what we have already done." -- Henry Wadsworth Longfellow