By James Langton


(September 10 – 09:00 ET) – The markets look set to go higher on a positive inflation report out of the U.S. Markets in Europe and Asia were more or less static earlier today ahead of the numbers, and S&P futures traders were, like everyone else, waiting for the Producer Price Index.


The headline rate came in at 0.5%, far higher than the 0.3% most economists were predicting. Normally this would hurt stocks, but the core rate, which excludes food and energy, came in down 0.1%. Futures initially dropped drastically on the headline rate, but then traded up strongly on the core rate, when traders realized that booming energy prices were responsible for the entire rise.


Separately, Statistics Canada this morning reported a bleaker-than-expected jobs picture for August, which may also be good for stocks. Employment was unchanged in August, although analysts were expecting an increase of 30,000. July produced a strong gain of 40,000 new jobs. As a result, the unemployment rate increased slightly to 7.8% from 7.7%. Analysts were expecting it to remain unchanged.


European markets were subdued ahead of the U.S. data. In London the FTSE 100 was down a mere 27 points, while Germany’s DAX index rose 27 points on news that its recovery is proceeding ahead of expectations. Paris’ CAC 40 index rose 20 points.


Overnight in Asia there were some strongly disparate forces at work that more or less cancelled each other out. In Japan, optimism about the economy is being nullified by the strong yen. Although intervention by the Bank of Japan overnight allowed the Nikkei index to ultimately push its way up 33.5 points. In Hong Kong, profit-taking was sabotaged by some blue-chip buying, leaving the Hang Seng index up one point at the close.


Manitoba’s Maple Leaf Foods Inc. today announced plans to acquire Landmark Group Inc., which owns Landmark Feeds Inc. and Elite Swine Inc. Maple Leaf will pay $150 million for the firm and its debt. Landmark shareholders will get up to 1.5 million shares of Maple Leaf in the deal.


Earnings warning season is upon us and Potash Corp. is one of the first out of the gate, warning that its third-quarter earnings may be just half of what it was expecting.