The Before the Bell report is constantly updated to reflect the latest news developments and market moves in the premarket. Check back later for updates.
U.S. and Canadian stock futures - after earlier posting mild gains - are losing ground heading into what should be another volatile week of trading that will see the flood gates opened up on U.S. corporate earnings.
More than a third of the Dow component stocks will be reporting third-quarter results this week, including Apple after today's closing bell. IBM got the tech sector this week off to a shaky start, reporting earnings and revenue well below Street expectations as client activity slowed in September. It says it will no longer reach its earnings forecast for 2015, ditching a five-year profit goal. IBM also announced it is paying contract chip maker Globalfoundries $1.5-billion (U.S.) in cash over the next three years to take the microchip operations off its hands. The divestiture has resulted in IBM taking a $4.7-billion pre-tax charge in its third quarter.
IBM shares are down about 7 per cent in the premarket. IBM is the second biggest component in the Dow Jones industrial average, and Dow futures are leading losses, off by 0.4 per cent after dropping by as much as 0.7 per cent earlier in the premarket.
Heading into this morning, about one-quarter of S&P 500 stocks reported their third quarter. Results so far have beat expectations by 0.9 per cent and 5.2 per cent on the top and bottom lines, respectively, compared to historical averages of 0.4 per cent and 4.3 per cent, according to RBC calculations.
Earnings growth is key in determining whether the recovery from this fall's major market pullback can be sustained. The early signs have been promising, led by the U.S. banking sector, but much more light will be shed on the matter this week.
Overnight, Japan's Nikkei posted a major rally of nearly 4 per cent, driven by weakness in the yen, although the gains only left it at its highest level in just over a week. Sentiment also got a boost there by reports that the country's $1.2-trillion public pension fund will raise its allocation of domestic stocks to 25 per cent and by comments from Prime Minister Shinzo Abe that hinted he may delay a second consumption tax rise. Chinese stocks rose modestly, as traders brace for the release of China's gross domestic product report on Tuesday.
European stocks this morning didn't find much encouragement from Asia's gains. Part of that was due to SAP SE, the world's largest supplier of business-management software, cutting its full-year earnings forecast. That weighed on the German index in particular, and data for that country didn't provide much hope that its economic outlook will be improving any time soon. German producer prices for September were flat compared to the month before and down 1 per cent from a year euro. Euro zone current account data showed that its surplus had narrowed slightly in August.
Now, here's a closer look at what's going on this morning and what is still to come.
MARKETS:
Futures:
S&P 500 -0.06 per cent; Dow -0.39 per cent; Nasdaq +0.12 per cent; S&P/TSX -0.17 per cent
Equities:
Hong Kong's Hang Seng +0.20 per cent
Shanghai composite index +0.68 per cent
Japan's Nikkei +3.98 per cent
London's FTSE 100 -0.92 per cent
Germany's DAX -1.25 per cent
France's CAC 40 -1.02 per cent
Stoxx 600 -0.53 per cent
Commodities:
WTI crude oil (Nymex Nov) -0.05 per cent at $82.71 (U.S.) a barrel
Natural gas (Nymex Jan) -1.27 per cent at $3.90 (U.S.)
Gold (Comex Dec) +0.27 per cent at $1,242.40 (U.S.) an ounce
Copper (Comex Dec) –0.97 per cent at $2.97 (U.S.) a pound
Currencies:
Canadian dollar at 88.83 (U.S.), up 0.0018
U.S. dollar index up 0.02 at 85.13
Bonds:
U.S. 10-year Treasury yield 2.21 per cent, up 0.008
ECONOMIC INDICATORS:
Canada wholesale trade sales rose 0.2 per cent in August, versus expectations for a 0.3 per cent decline.
STOCKS TO WATCH:
Canadian Pacific confirmed it has terminated exploratory talks with U.S. railway CSX that could have involved a merger.
Royal Bank of Canada said it plans to repurchase up to 12 million of its common shares, representing 0.8 per cent of its shares.
IBM reported adjusted Q3 EPS of $3.68, well below the Street estimate of $4.32. It says it will no longer reach its earnings forecast for 2015, ditching a five-year profit goal. IBM also announced today it is paying contract chip maker Globalfoundries $1.5-billion (U.S.) in cash over the next three years to take the microchip operations off its hands. The divestiture has resulted in IBM taking a $4.7-billion pre-tax charge in its third quarter. Shares are down 7 per cent in the premarket.
Valeant Pharmaceuticals reported third-quarter EPS of $2.11 (U.S.) versus expectations for $1.99. Shares are up 4 per cent in the premarket.
Halliburton raised its dividend and reported Q3 adjusted profit from continuing operations of $1.19 (U.S.) versus expectations for $1.09.
Gannett reported Q3 adjusted EPS of 59 cents, ahead of the Street consensus of 55 cents.
Hasbro reported Q3 adjusted EPS of $1.46, a penny better than Street estimates.
Other today include: Brookfield Canada; Apple; Boise Cascade; Celanese; Chipotle Mexican Grill; Kaiser Aluminum; Peabody Energy; Steel Dynamics; Texas Instruments.
ANALYST ACTIONS:
Canaccord upgraded Rogers Communications to "buy" from "hold" and maintained a $46 (Canadian) price target. It says the stock has been oversold on wireless risks. National Bank financial also upgraded Rogers today to an "outperform" rating.
Goldman Sachs upgraded Intrawest Resorts to "buy" from "neutral" with a price target of $11.50 (U.S.).
THIS MORNING'S TOP INVESTING READS ON THE WEB:
More and more credit gurus are saying junk bonds are now undervalued.
If its currency wasn't in free fall, Russia would really be in trouble.
The investment strategy of a so-called robo-adviser that has come to Canada. (Part 2 of this interview can be seen here.)
Citigroup sees $1.1-trillion stimulus from the oil price plunge.
People think CEO pay is out of control. The truth is much worse than they know.
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Have feedback on our daily Before the Bell report and suggestions on how to make it more useful in your investing day? Please contact Inside the Market Editor Darcy Keith at dakeith@globeandmail.com.
Darcy Keith