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 are pointing to a lower start to trading this morning, and in what is becoming a familiar pattern, energy stocks are likely to take the heaviest beating.
West Texas Intermediate crude oil futures are down about 2.4 per cent - and Brent is down an even steeper 3 per cent to five-year lows - as concerns about too much supply and limited demand continues to discourage bids. A number of major banks have cut their outlook on crude oil, including Morgan Stanley on Friday, which said oil prices could fall as low as $43 (U.S.) a barrel next year. It cut its average 2015 Brent base-case outlook by $28 to $70 a barrel - expecting markets to see peak supply next year.
Fresh discouraging economic data out of China today isn't helping the situation much for crude oil - but the numbers actually helped equities in Shanghai to surge 2.8 per cent to fresh multi-year highs on thoughts they will further push policy makers into announcing fresh stimulus numbers. China reported that its exports rose 4.7 per cent from a year earlier in November, about half of economists' expectations, while imports dropped 6.7 per cent, also about half of what markets were anticipating. The news out of Japan wasn't great either, with third-quarter gross domestic produce shrinking more than initially estimated, at 1.9 per cent.
There's little U.S. economic data today that will drive markets. Instead, a major focus will remain on the oil patch, where capital expenditures plans for next year are being cut dramatically by some producers and drilling services companies in reaction to the plunge in crude values over the last several months.
Now, here's a closer look at what's going on this morning and what is still to come.
MARKETS:
Futures:
S&P 500 -0.31 per cent; Dow -0.27 per cent; Nasdaq -0.31 per cent; S&P/TSX -0.18 per cent
Equities:
Hong Kong's Hang Seng +0.19 per cent
Shanghai composite index +2.80 per cent
Japan's Nikkei +0.09 per cent
London's FTSE 100 -0.83 per cent
Germany's DAX -0.52 per cent
France's CAC 40 -0.78 per cent
Stoxx 600 -0.56 per cent
Commodities:
WTI crude oil (Nymex Jan) -2.42 per cent at $64.25 (U.S.) a barrel
Natural gas (Nymex Jan) -1.50 per cent at $3.75 (U.S.)
Gold (Comex Feb) +0.41 per cent at $1,195.30 (U.S.) an ounce
Copper (Comex Mar) -0.26 per cent at $2.90 (U.S.) a pound
Currencies:
Canadian dollar at 87.39 (U.S.), down 0.0005
U.S. dollar index up 0.05 at 89.38
Bonds:
U.S. 10-year Treasury yield 2.33 per cent, up 0.02
ECONOMIC INDICATORS:
Canada housing stats for November were 195,600 when annualized, close to market expectations.
Canadian building permits for October were up 0.7 per cent from September, versus the Street expectation for a 3.9 per cent rise.
(10 a.m. ET) U.S. Federal Reserve Labor Market Conditions Index.
STOCKS TO WATCH:
McDonald's shares are down nearly 3 per cent in the permarket after it reported another decline in global same-store sales for November and warned that the strong U.S. dollar and a supply issue in China would hurt earnings in the fourth quarter.
Precision Drilling said it expected 2015 capital spending to be 44 per cent lower than this year's already lowered budget as a steep fall in oil prices threaten to render exploration and development project uneconomic. It plans to idle rig-building activity once it has completed delivery of 16 previously announced rigs.
Vermilion Energy said it would cut its capital spending to $525-million in 2015, down by $150-million from 2014 projections.
Norbord and Ainsworth Lumber said Norbord will acquire Ainsworth in an all-stock transaction "to create a leading global wood products company focused on oriented strand board across North America, Europe and Asia."
Merck said it has agreed to buy Cubist Pharmaceuticals for $8.4-billion (U.S.), or $102 per share in cash.
Earnings include: Kirkland Lake Gold; H&R Block; Vail Resorts.
ANALYST ACTIONS:
FirstEnergy Capital downgraded Bankers Petroleum to "outperform" from "top pick" with a price target of $5.75 (Canadian).
National Bank FInancial downgraded Bank of Nova Scotia to "sector perform" from "outperform" with a price target of $73 (Canadian).
Desjardins Securities downgraded Baytex Energy to "hold" from "buy" with a price target of $25 (Canadian).
Desjardins Securities upgraded Husky Energy to "buy" from "hold" with a price target of $29 (Canadian).
Beacon Securities upgraded Major Drilling Group International to "buy" from "hold" with a price target of $7 (Canadian).
Macquarie upgraded National Bank of Canada to "neutral" from "underperform" with a price target of $56 (Canadian).
Desjardins Securities upgraded Peyto Exploration & Development to "buy" from "hold" with a price target of $40 (Canadian).
FirstEnergy Capital downgraded Pacific Rubiales Energy to "underperform" from "market perform" with a price target of $7 (Canadian).
Desjardins Securities downgraded Penn West Petroleum to "sell" from "hold" with a price target of $3 (Canadian).
Desjardins Securities downgraded Tourmaline Oil to "hold" from "buy" with a price target of $44 (Canadian).
GMP upgraded Yamana Gold to "buy" from "hold" with a price target of $6.40 (Canadian).
RBC Dominion Securities cut its price target on Melcor Developments to $29 (Canadian) from $35 and maintained an "outperform" rating.
Merrill Lynch downgraded Norfolk Southern to "neutral" from "buy" and cut its price target to $111 (U.S.) from $122.
BMO Nesbitt Burns raised its price target on Apple to $123 (U.S.) from $113 and maintained an "outperform" rating.
Nomura Securities downgraded Philip Morris to "reduce" from "neutral" but raised its price target to $77 (U.S.) from $71.80.
Bernstein downgraded Wells Fargo to "market perform" from "outperform" with an unchanged price target of $56 (U.S.).
Keefe Bruyette upgraded Nasdaq OMX Group to "outperform" from "market perform" with a price target of $55 (U.S.).
THIS MORNING'S TOP INVESTING READS ON THE WEB:
Decoding international equity ETF returns.
Wall Street's six worst trades of 2014.
The massive gains in Chinese stocks over the past two weeks have the air of "mania taking hold."
Uber is too big for investors to ignore.
Why the oil bust could end up being good news for drillers.
From a technical, long-term perspective, Chinese stocks are looking very healthy.
Fed simulations call for rate hikes soon.
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Darcy Keith