Luke KawaThe Globe and Mail
The Before the Bell report is updated throughout the premarket to reflect the latest news developments and market moves. Check back later for updates.
Some long-awaited monetary stimulus from the People's Bank of China provided only a marginal amount of support for equity futures ahead of the open. Chinese monetary policymakers joined their peers in Australia, Russia, Denmark, Switzerland, Canada and elsewhere by easing policy in 2015, though they chose to use a different tool than their counterparts. The Chinese central bank announced that it was lowering its reserve requirement ratio by 50 basis points to 19.5 per cent, effective February 5.
This decision allows Chinese banks to hold fewer reserves and increase liquidity. Disinflation and a general deterioration in data – as evidenced by the HSBC manufacturing purchasing managers' index, which suggested the sector contracted in January – prompted the central bank's move to boost the economy. The People's Bank of China last cut its benchmark rate to 5.6 per cent on November 21, 2014, a show of surprising stimulus that sent equities higher and fostered a round of weakness in its currency.
European markets were weaker despite a strong set of economic data, as continued concerns about a possible "Grexit" weigh on sentiment. The services purchasing managers' index for European nations generally surprised to the upside, while retail trade in the euro area rose 2.8 per cent year-over-year in December, its largest one-month gain in eight years.
Canadian equities have performed admirably over the past four sessions thanks to a robust rebound in the price of oil, though data published later this morning threatens to derail this recovery. West Texas Intermediate crude has rocketed to the upside in recent sessions, with the active futures contract breaking above $54 per barrel (U.S.) on Tuesday afternoon to put the commodity in a bull market. The speed of the advance, however, suggests that this may have been a round of short-covering spurred by the precipitous decline in active rigs in the United States. Traders will look to the latest U.S. inventories figures, released at 10:30 am ET, to see if this surge in prices is supported by the fundamentals. The price of oil is tumbling ahead of the open, pointing to a lower open for the S&P/TSX Composite index.
We have details on the overnight action, economic data, and the companies reporting earnings today below.
MARKETS:
Futures:
S&P 500 -0.4 per cent; Dow -0.2 per cent; Nasdaq -0.4 per cent
Equities:
Hong Kong's Hang Seng +0.51 per cent
Shanghai composite index -0.96 per cent
Japan's Nikkei +1.98 per cent
London's FTSE 100 -0.55 per cent
Germany's DAX -0.33 per cent
France's CAC 40 -0.22 per cent
Stoxx 600 +0.08 per cent
Commodities:
WTI crude oil (Nymex Mar) -3.3 per cent at $51.33 (U.S.) a barrel
Natural gas (Nymex Mar) -0.7 per cent at $2.735
Gold (Comex Apr) +0.6 per cent at $1,268.20 (U.S.) an ounce
Copper (Comex Mar) +0.0 per cent at $2.58 (U.S.) a pound
Currencies:
Canadian dollar at 80.37 (U.S.), down 0.002
U.S. dollar index up 0.01 at 93.692
Bonds:
U.S. 10-year Treasury yield 1.7905 per cent, down 0.0018
ECONOMIC INDICATORS:
(815 a.m. ET): U.S. ADP Non-Farm Employment Report for January, which showed net job growth of 213,000, modestly weaker than the consensus estimate of 220,000.
(10 a.m. ET) U.S. non-manufacturing ISM index, expected to moderate to 56.4 from 56.5 in December.
(10 a.m. ET) Canada's Ivey Purchasing Managers' Index for January, which came in at 46.7 in December.
(1030 a.m. ET) United States crude oil inventories net change for the week ending January 30, forecast to rise by 3.9 million barrels.
STOCKS TO WATCH:
Staples has announced plans to buy Office Depot for $6.3-billion, or about $11 a share. The transaction represents a 44 percent premium to Office Depot's closing price on Feb. 2.
General Motors reported Q4 adjusted EPS $1.19 US vs. the Street estimated 83 cents. The automaker said it expects to hike its dividend by 20 per cent in Q2, and plans to pay its hourly workers a bonus of $9,000 (U.S.). Shares are up more than 2 per cent in the premarket.
Merck reported Q4 non-GAAP EPS of 87 cents (U.S.) vs. expectations of 86 cents. Shares are down 1.6 per cent in the premarket.
Toyota Motors boosted its guidance for operating profits for the 12 months ending March 31th by 8 per cent to 2.7 trillion yen, which remains slightly below the consensus estimate among analysts.
Other earnings expected: ATS Automation, Calian Technologies, Canaccord Genuity, Canfor, Canfor Pulp, Gildan Activewear, Intact Financial, Suncor Energy, Allergan Inc., Alliance Fiber Optic Products Inc., Allstate Corp., AmeriGas Partners L.P., Arlington Asset Invest Corp., Arrow Electronics Inc., Automatic Data Processing Inc., BioMed Realty Trust Inc., Boot Barn Holdings Inc., Boston Scientific Corp., Brandywine Realty Trust, Brookdale Senior Living Inc., Cardtronics Inc., Cascade Microtech Inc., CBRE Group Inc., Cincinnati Finanical Corp., Clearwater Paper Corp., ClickSoftware Tech Ltd., Clorox Co., CVS Health Corp., Dawson Geophysical Co., eGain Corp., Enbridge Energy Management L.L.C., EnerSys, Everest RE Group Ltd., Exponent Inc., Farmer Bros. Co., FEI Co., Fidelity & Guaranty Life, FMC Corp., FormFactor Inc., Fortune Brands Home & Security Inc., General Cable Corp., General Motors Co., Geospace Tech Corp., Gladstone Invest Corp., Glu Mobile Inc., Green Plains Inc., Hain Celestial Group Inc., Hillenbrand Inc., Humana Inc., Interactive Intelligence Group Inc., iRobot Corp., Ixia, Keurig Green Mountain Inc., Knoll Inc., Level 3 Commun Inc., Marathon Petroleum Corp., Merck & Co. Inc., Motorola Solutions Inc., Murphy USA Inc., Neurocrine Biosciences Inc., Plains All American Pipeline L.P., Prudential Fincl Inc., Ralph Lauren Corp., Scotts Miracle-Gro Co., Shutterfly Inc., Spectra Energy Corp., Spectrum Brands Holdings Inc., Twenty-First Century Fox Inc., Under Armour Inc., USA Tech Inc., Whirlpool Corp., YUM! Brands Inc.
ANALYST ACTIONS:
Fifth Third Bancorp was upgraded to "outperform" from "neutral" by analysts at Macquarie.
Wendy's Co. was raised to "overweight" from "equal weight" over at Stephens.
Marriott International Inc. was downgraded to "neutral" from "outperform" at Robert Baird.