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Colin Cieszynski

The Before the Bell report is compiled by editors of The Globe and Mail and is updated throughout the morning to reflect latest developments. Colin Cieszynski, Chartered Financial Analyst and Chartered Market Technician, is chief market strategist with CMC Markets.

Stocks and commodities are trading sharply lower again this morning, with technical breakdowns across a number of markets signalling the start of another downleg in the current bear market.

The Hang Seng returned to trading with a 3.8 per cent drop while Japanese and mainland China markets were closed for holidays. In futures trading these markets have continued to drop, with Hong Kong futures now down 6.7 per cent and Nikkei futures down 3.0 per cent. European indexes are also taking a big hit today with the Dax and FTSE both down about 2.2 per cent and several continental indexes down even more than that. U.S. markets are also getting caught up in this wave of renewed selling pressure, with Dow and S&P 500 futures down about 1.8 per cent.

The most significant aspect of today's trading is the number of markets that have broken support levels to signal new downlegs, including West Texas intermediate crude oil below $26.60, the Nasdaq 100 below 3,900 and the FTSE 100 below 5,600. These markets and others now find themselves at a key turning point. Rebounds off of morning lows and retests of breakdown points suggest we could be near a selling climax. But if markets can't rebound further and the breakdowns are confirmed, it would mean the bears have found new strength and we could see additional weakness in the coming days.

Just as capital continues to exit risk markets, it continues to flow back into defensive havens, particularly gold, which has blasted through $1,200 and the U.S. dollar/Japanese yen exchange rate, which plunged down to 111.00. These markets have been getting overextended and have started to show signs of exhaustion.

In currency action today, the U.S. dollar continues to trend lower while traders gear up for a second day of Janet Yellen testimony and questions. The Canadian dollar is also falling along with oil prices.

The Swedish krona has been falling after Sweden's Riksbank cut interest rates deeper into negative territory, indicating negative rates are working for them and further cuts are possible. It threatened to intervene in forex markets if the the krona rallies too much.

The main reason fear has been running rampant in the markets today appears to be a lack of news to cling to and what news there has been was bearish. Ms. Yellen's testimony appears to have been geared to give the Fed maximum flexibility going forward. Sweden's dovish central bank comments raises questions about the health of the European economy (and the banking systems in some other countries, not Sweden itself).

Meanwhile, stateside, we could see significant reactions in stocks today to overnight earnings reports, particularly Twitter's slowing subscriber growth and Tesla's soft deliveries guidance. It's also a bit day for Canada earnings, with mixed results so far. There's also been more dividend and capex cuts in the oil patch.

Now, here is a closer look at key market data, and corporate and economic news.

MARKET DATA:

Futures

S&P 500 -1.7 per cent; Dow -1.7 per cent; Nasdaq: -1.8 per cent; TSX 60 -1.2 per cent

Equities
Hong Kong's Hang Seng -3.85 per cent
Shanghai composite index -0.65 per cent
Japan's Nikkei 225 Closed for holiday
London's FTSE -2.12 per cent
Germany's DAX -2.53 per cent
France's CAC 40 -3.65 per cent

Commodities
WTI crude oil (Nymex March) -2.77 per cent at $26.68 (U.S.) a barrel
Gold (Comex April) +3.47 per cent at $1,235.90 (U.S.) an ounce
Copper (Comex March) -0.59 per cent at $2.02 (U.S.) a pound

Currencies
Canadian dollar -0.0039 at 71.41 cents (U.S.)
U.S. dollar index -0.422 at 95.466

Bonds
U.S. 10-year Treasury yield -0.10 at 1.58 per cent

KEY ECONOMIC RELEASES

The number of Americans filing for unemployment benefits fell more than expected last week, suggesting the labor market remained on solid footing despite slowing economic growth and a stock market rout. Initial claims for state unemployment benefits declined 16,000 to a seasonally adjusted 269,000 for the week ended Feb. 6, the Labor Department said on Thursday. The prior week's claims were unrevised. Economists polled by Reuters had forecast claims slipping to 281,000 in the latest week.

(10 a.m. ET) Fed Chair Yellen testifies to the Senate Banking Committee.

KEY CORPORATE NEWS

Oil producer Cenovus Energy Inc posted a bigger-than-expected quarterly loss and announced a fresh round of cuts to its quarterly dividend, 2016 capital budget and work force, as it tries to shore up finances amid an incessant fall in oil prices. Cenovus, which had cut its dividend by 40 percent in 2015, said it would slash its current-quarter dividend by 69 percent to 5 Canadian cents per share.The company also plans to cut operating, general and administrative costs, including for its workforce, by $200 million. Cenovus's net loss widened to $641 million, or 77 Canadian cents per share, in the fourth quarter ended Dec. 31, from $472 million, or 62 Canadian cents per share, a year earlier. Operating loss, which excludes most one-time items, fell by more than a quarter to $438 million, or 53 Canadian cents per share. Analyst on average were expecting a loss of 20 Canadian cents per share, according to Thomson Reuters I/B/E/S.

TransCanada Corp. reported its first-ever loss in the fourth quarter of 2015 as it wrote off investments in the project and contended with lower power prices in Alberta. The loss was $2.5 billion or $3.47 a share, compared with net income of $458 million or 65 cents a year earlier. Excluding one-time items such as a $2.9 billion writedown tied to Keystone, the results were better than the the 61-cent average of 12 analysts' estimates compiled by Bloomberg.

Canadian insurer Manulife Financial Corp reported fourth-quarter earnings that missed market estimates on Thursday, hit by the impact of weak oil prices on its investments. Overall net income for the quarter ended Dec. 31 was $246 million, or 11 Canadian cents a share, compared with $640 million, or 33 Canadian cents a share, a year ago. Core earnings rose to 42 Canadian cents share. Analysts on average had expected earnings of 45 Canadian cents a share, according to Thomson Reuters I/B/E/S.

Telus Corp. reported fourth-quarter profit that missed analysts' estimates as economic weakness in its home market of Alberta weighed on customer gains. Earnings excluding some items were 54 Canadian cents a share, compared with the average estimate compiled by Bloomberg of 55 Canadian cents. Sales were $3.22 billion, compared with a projection of C$3.25 billion. The carrier added 62,000 wireless contract subscribers. Six analysts surveyed by Bloomberg estimated 74,000 on average.

Teck Resources Ltd., Canada's largest diversified miner, reported earnings that beat analysts' estimates as costs declined and a weakening local currency helped support profitability. The company had a loss of $459 million, or 80 cents a share, compared with profit of $129 million, or 23 cents, a year earlier. Excluding writedowns and other one-time items, the company earned 3 cents a share, compared with the 1-cent loss estimated on average by 21 analysts tracked by Bloomberg.

Thomson Reuters Corp reported higher-than-expected quarterly profit on Thursday and said it expects its revenue to grow by low single digits in 2016. Adjusted for special items, fourth-quarter net earnings were 65 cents per share, up from 43 cents per share a year ago. Analysts, on average, were looking for 58 cents per share, according to Thomson Reuters I/B/E/S. Quarterly revenue was slightly below estimates, down 2 percent to $3.15 billion, but would have been up 2 percent when factoring out currency rates. Analysts had forecast $3.17 billion.

Precision Drilling Corp. on Thursday reported a loss of $203 million in its fourth quarter. On a per-share basis, the Calgary, Alberta-based company said it had a loss of 69 cents. Losses, adjusted for asset impairment costs, came to 4 cents per share. The results surpassed Wall Street expectations. The average estimate of seven analysts surveyed by Zacks Investment Research was for a loss of 11 cents per share.

PepsiCo Inc reported better-than-expected quarterly net revenue, as higher sales of snacks and beverages in North America helped reduce the impact of a strong dollar. Net income attributable to the company rose to $1.72 billion, or $1.17 per share, in the fourth quarter ended Dec. 26, from $1.31 billion, or 87 cents per share, a year earlier. Net revenue fell 7 percent to $18.59 billion. Analysts on average had expected net revenue of $18.51 billion, according to Thomson Reuters I/B/E/S.

Tesla Motors Inc's shares rose as much as 8 percent in premarket trading on Thursday after the electric luxury car maker forecast a big jump in vehicle sales this year, a target some Wall Street analysts found ambitious. The company's shares rose to $155 despite a bigger fourth-quarter loss, as Chief Executive Elon Musk promised investors on Wednesday that Tesla would start making money this year.

U.S. fertilizer company Mosaic Co , the world's largest producer of finished phosphate products, forecast lower selling prices for potash and phosphate in the current quarter. The Plymouth, Minnesota-based company, which reported a better than expected fourth-quarter profit, also announced a $75 million share repurchase program. Adjusted earnings per share was 53 cents, compared with average analysts' estimates of 44 cents per share, according to Thomson Reuters I/B/E/S.

Reynolds American Inc. reported fourth-quarter net income of $279 million. On a per-share basis, the Winston Salem, North Carolina-based company said it had profit of 19 cents. Earnings, adjusted for non-recurring costs, were 48 cents per share. The results did not meet Wall Street expectations. The average estimate of five analysts surveyed by Zacks Investment Research was for earnings of 50 cents per share.

Shares of Twitter were down 8.2 per cent in the premarket after the company reported its first quarter with no increase in users since it went public.

Cisco was up 3.7 per cent in the premarket after reporting a bigger-than-expected quarterly profit.

Expedia soared 10 in the premarket after it forecast higher 2016 profit. Peer TripAdvisor was also up 10.4 percent at $60 after its profit beat estimates.

Other earnings today include: Activision Blizzard Inc.; Advance Auto Parts Inc.; American International Group Inc.; Canaccord Genuity Group Inc.; CBS Corp.; Coca-Cola Enterprises Inc.; DREAM Unlimited Corp.; Great-West Lifeco Inc.; Groupon Inc.; Industrial Alliance Insurance and Financial Services Inc.; Interfor Corp.; Molson Coors Brewing Co.; Niko Resources Ltd.; Pandora Media Inc.; Rio Tinto PLC; SMART Technologies Inc.; Time Inc.; TMX Group Ltd.; Total SA; TransForce Inc.; West Fraser Timber Co Ltd.

Also see: Thursday's small-cap stocks to watch

With files from wire services

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