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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.

Stock markets in Europe and North America are trading flat to modestly lower today, as traders navigate around a number of economic reports that have been released, or are about to. Futures for the TSX 60, Dow and S&P 500 are down around 0.2 per cent.

The U.S. retail sales report was the main scheduled event for today and it came in stronger than expected, jumping in April by the most in a year. This indicates that the U.S. economy is recovering from an early-year slowdown, even though other recent economic reports haven't been as uplifting - particularly recent non-farm payrolls and jobless claims reports. Earnings from U.S. retailers so far this week have been dismal, starting with Macy's and continuing with Nordstrom, which missed severely on earnings (26 cents vs. the Street estimate of 47 cents) and posted negative same-store sales of 1.7 per cent and cut guidance for this fiscal year. Nordstrom lost over 10 per cent at one point in aftermarket trading Thursday night, although video card maker Nvidia rallied after beating the Street on earnings.

Gloomy data on other fronts and negative talk from monetary policy officials isn't helping sentiment either. The campaign of fear against Brexit remains in high gear, with IMF President Lagarde picking up from where Bank of England Governor Mark Carney left off, warning a Brexit vote could cause a technical recession in the U.K. He suggested the consequences could range from "bad to very bad" and reiterated that U.K. interest rates could rise in a Brexit scenario.

The increasingly shrill tone of outsiders supporting the "Remain" campaign, including U.S. President Barrack Obama a few weeks ago, leaves me to wonder what they are more scared of: the supposed negative impact of a Brexit on the U.K. economy, or that a successful post-Brexit U.K. could inspire other countries to do the same, potentially impacting those who have the most to gain from maintaining the status quo.

U.K. construction data this morning came in well below expectations, suggesting that uncertainty over the vote may be dragging on the economy. But GDP reports out of Europe today that saw the euro zone economy grow less than expected, Germany slow down, and Poland and Portugal miss badly relative to expectations, indicate the vote isn't the only factor amid a general weakening in world economies.

The British pound is trading slightly lower against the U.S. dollar, similar to other majors and is flat against the euro. It increasingly looks like the negative impact on sterling peaked back in February, with each bout of vote related negativity having less and less of an impact.

As the day progresses we may also see traders position ahead of what could be an active start to next week's trading. Chinese retail sales and industrial production are due over the weekend, which could give another read on how their economy is going. Already this morning after Chinese markets closed, China loan and money supply data came in below expectations, suggesting weakening economic activity.

Now, here is a closer look at what's going on this morning and what is still to come.

MARKET DATA:

Futures

Dow -0.17 per cent; S&P 500 -0.10 per cent; Nasdaq: -0.03 per cent; TSX 60 -0.09 per cent

Equities
Japan's Nikkei -1.41 per cent
Shanghai composite index -0.30 per cent
Hong Kong's Hang Seng -0.99 per cent 
Germany's DAX +0.06 per cent
London's FTSE -0.42 per cent
France's CAC 40 -0.32 per cent

Commodities
WTI crude oil (Nymex June) -1.31 per cent at $46.09 (U.S.) a barrel
Gold (Comex June) +0.28 per cent at $1,274.80 (U.S.) an ounce
Copper (Comex July) +0.34 per cent at $2.08 (U.S.) a pound

Currencies
Canadian dollar -0.12 at 77.73 cents (U.S.)
U.S. dollar index +0.20 at 94.35

Bonds
Canada 10-year bond yield -0.016 at 1.303 per cent
Canada 2-year bond yield -0.010 at 0.556 per cent

KEY ECONOMIC RELEASES

The U.S. Commerce Department said on Friday retail sales jumped 1.3 per cent last month, the largest gain since March 2015. March's retail sales were revised up to show a 0.3 per cent decline instead of the previously reported 0.4 per cent drop. Excluding automobiles, gasoline, building materials and food services, retail sales shot up 0.9 percent last month after an upwardly revised 0.2 percent gain in March. Economists polled by Reuters had forecast retail sales rising 0.8 percent and core retail sales gaining 0.3 percent last month.

The Labor Department said on Friday its producer price index climbed 0.2 percent last month after slipping 0.1 percent in March. In the 12 months through April, the PPI was unchanged after dipping 0.1 percent in March. Economists polled by Reuters had forecast the PPI gaining 0.3 percent last month and rising 0.2 percent from a year ago.

Still to come:
(10 a.m. ET) U.S. business inventories for March. Consensus is an increase of 0.2 per cent from February.
(10 a.m. ET) U.S. University of Michigan Consumer Sentiment for May. Consensus is 90.0, up from 89.0 in April.
(1 p.m. ET) Baker-Hughes rig count

KEY STOCKS TO WATCH

Sirius XM Canada Holdings Inc said on Friday that Sirius XM Holdings Inc, its biggest shareholder, along with other shareholders would take the company private for about $351-million. Sirius XM Canada's shareholders will receive $4.50 per share in cash or stock for each share they own, representing a premium of 6.4 per cent to the stock's closing price on Thursday.

U.S. department store operator J.C. Penney Co Inc joined rivals including Macy's Inc and Kohl's Corp in reporting a drop in sales in a quarter marked by a slump in apparel demand. Shares of the company, which also reported a surprise drop in comparable sales, fell 13 per cent to $6.78 in premarket trading on Friday.

Department store operator Nordstrom's shares were down nearly 18 per cent at $37.11 after weak results.

Nvidia was up 7.2 per cent at $38.15 after the company forecast better-than-expected revenue for the current quarter.

UnitedHealth was down 2.8 percent at $126 after a judge ruled in favor of Republicans who challenged President Barack Obama's healthcare law, ruling that his administration had overstepped its constitutional powers on government spending.

Apple Inc. has invested $1 billion in Chinese ride-hailing service Didi Chuxing, the main competitor in China for Uber Technologies Ltd.

Earnings today include: Americas Silver Corp.; Bellatrix Exploration Ltd.; Caza Oil & Gas Inc.; Concordia Healthcare Corp.; Directcash Payments Inc.; Enercare Inc.; Imperial Metals Corp.; J C Penney Company Inc.; Power Corporation of Canada; Pretium Resources Inc.; Timmins Gold Corp.; Torex Gold Resources Inc.; Valener Inc.

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

With files from wire services

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