What you need to know before markets open


Canada’s main stock index was set for a lower open on Wednesday as fears over eurozone’s debt refinancing intensified after the German bond auction failed to impress investors.

FACTORS TO WATCH

* Canadian equity futures: pointed to a lower open.

* U.S. stock index futures pointed to a mixed open, with futures for the S&P 500 down 0.1%, Dow Jones futures down 0.1% but Nasdaq 100 futures up 0.3% at 0900 GMT.

* European shares slipped from five-month highs , with Italy’s UniCredit leading banks lower after it priced a capital increase at a deep discount, suggesting a weak appetite at a time when several lenders face capital increases.

COMMODITY PRICE MOVES

* The Thomson Reuters-Jefferies CRB index, a global commodities benchmark, fell 0.27% in early trade.

* Oil was not far from seven-week highs, supported by fears of possible supply disruptions from Iran and by strong economic data from the United States and China.

* Gold eased as the euro declined, but was still near one-week highs on signs of improved consumer demand in Asia, prompted by last week’s price drop to six-month lows.

* Copper prices fell, with a rally from the previous session dissipating as concerns about the eurozone debt crisis eroded confidence and prompted worries about the demand outlook for industrial metals.

CANADIAN STOCKS TO WATCH

* Cameco Corp.: The uranium producer said it has constructed a second shaft to reach the main mine workings at its Cigar Lake uranium mining project in northern Saskatchewan.

ANALYST RECOMMENDATIONS

Following is a summary of research actions on Canadian companies reported by Reuters.

* Athabasca Oil Sands Corp. price target cut to $18.50 from $21 at CIBC

* Capital Power Corp. coverage started with sector outperform rating; $29 price target at CIBC

* Potash Corp of Saskatchewan coverage started with underperform rating at National Bank Financial

* Vero Energy Inc price target cut to $3.60 from $5 at National Bank Financial; price target cut to $4.25 from $6.50 at CIBC

UNITED STATES

U.S. stock index futures fell on Wednesday after a sharp market rally in the previous session, as investors focused again on Europe’s debt problems.

* Shares of European banks dropped on concerns a tight credit market will make it expensive for them to raise capital and for eurozone countries to refinance debt.

* Italy’s biggest bank UniCredit CRDI.MI sank nearly 10% after it priced a 7.5-billion euro (US$9.8-billion) capital hike at a 43 percent discount.

* In a sign of how wary European banks are of lending to each other, commercial lenders’ overnight deposits at the European Central Bank hit a new record high of 453-billion euros, data showed.

* A huge sovereign refinancing cycle is kicking off in the eurozone in the first quarter, with traders worried that debt-laden countries such as Italy and Spain may have to pay high prices to meet their needs.

* On the U.S. macro front, investors awaited November factory orders at 10 a.m. EST (1500 GMT), with economists in a Reuters survey expecting a rise of 1.7%, compared with a 0.4% drop in October.

* The U.S. Federal Reserve, in a move that could push back expectations of when near-zero U.S. interest rates will rise, will begin publishing its policymakers’ forecasts for borrowing costs.

* S&P 500 futures fell 3.6 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures DJc1 lost 28 points, and Nasdaq 100 futures NDc1 added 0.25 point.

* Republican presidential candidate Mitt Romney squeaked out a victory in Iowa’s first-in-the-nation nominating contest on Tuesday as former senator Rick Santorum rode lingering conservative unease to a surprise second-place finish.

* Exxon Mobil Corp is in talks to sell most of its 50% stake in TonenGeneral Sekiyu KK and unload other assets in Japan in a deal that could be worth as much as US$5-billion, sources said.

* Eastman Kodak Co may be kicked off the New York Stock Exchange if it cannot boost its share price over the next six months.

* U.S. investors pushed shares higher on Tuesday to begin the new year, with the broad S&P 500 index closing at its highest since late October.

© Thomson Reuters 2011

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