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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.

The murder of U.K. MP Jo Cox continued to send shockwaves around the world overnight. Markets that didn't participate in Thursday's reversals - which coincided with Ms. Cox's attack and included gold erasing an earlier rally to end negative - are up the most, with Europe's FTSE, Germany's DAX and Japan's Nikkei all up about 1 per cent. West Texas intermediate and brent crude are up 1.3 per cent and 1.8 per cent, respectively, pulling the Canadian dollar back up with them. The loonie may remain active through the morning around the Canadian inflation report.

In contrast, markets that staged big moves Thursday levelled off overnight. The British pound, for example - which soared 2.0 per cent off its low Thursday - is up just 0.3 per cent today. Gold is down again but is trading up off its overnight lows, while other currencies like the Japanese yen and euro have levelled off. Similarly, U.S. index futures are trading flat to slightly lower after Wall Street erased early losses to finish in the green on Thursday.

Prior to Thursday's tragedy, news flow including poll results and strong U.K. retail sales had been pointing to growing momentum for the Leave side. By mid-morning, many markets had been extremely overextended, with too many players piled in on the fear of Brexit side. The death of Ms. Cox, a pro-"remain" politician, sparked speculation that it will tilt the odds in favour of a stay vote next week vote.

The way that markets reversed so sharply and so quickly felt disrespectful at first. The lack of follow-through in the early movers, however, now feels like the big pops were a bout of short-covering rather than a change in sentiment. The big reversals do show that by Thursday morning, the prospects of a Leave win and an actual Brexit had been getting close to fully priced in to the markets.

Brexit campaigning remains suspended today and it remains to be seen what impact this tragedy, if any, may have on public opinion or market sentiment. The reaction to last weekend's massacre in Orlando and previous similar attacks in the U.S. suggest that events like this tend to entrench existing stances, not change them, but it's too early to say in this case.

Because nobody knows what's going to happen next, traders should view today's action as a pause within an ongoing storm. It would be premature to think of this as any more than a short-term trading reversal and dangerous to become complacent. When the campaigns resume, we may continue to see big intraday swings and reversals right through to the vote.

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

MARKET DATA: (as of approx 7 a.m. ET)

Futures

Dow -0.11 per cent; S&P 500 -0.19 per cent; Nasdaq: -0.09 per cent; TSX 60: +0.15 per cent

Equities
Japan's Nikkei +1.07 per cent
Shanghai composite index +0.43 per cent
Hong Kong's Hang Seng +0.66 per cent 
Germany's DAX +0.93 per cent
London's FTSE +1.24 per cent
France's CAC 40 +0.95 per cent

Commodities
WTI crude oil (Nymex Jul) +1.67 per cent at $46.98 (U.S.) a barrel
Gold (Comex Aug) -0.63 per cent at $1,290.20 (U.S.) an ounce
Copper (Comex July) +0.42 per cent at $2.056 (U.S.) a pound

Currencies
Canadian dollar +0.30 at 77.44 cents (U.S.)
U.S. dollar index -0.188 at 94.381

Bonds
Canada 10-year bond yield +0.022 at 1.129 per cent

KEY ECONOMIC RELEASES

U.S. housing starts slipped in May as the construction of multi-family housing units dropped, but further gains in building permits suggested a rebound that would continue to support economic growth in the second quarter. Groundbreaking fell 0.3 percent to a seasonally adjusted annual pace of 1.16 million units, the Commerce Department said on Friday. Starts in April were little changed at a 1.17 million-unit pace. Economists polled by Reuters had forecast housing starts falling to a 1.15 million-unit pace last month. Applications for building permits, an indicator of future activity, rose 0.7 per cent in May to an annual rate of 1.14 million.

Canada's inflation rate in May was 1.5 per cent, down from 1.7 per cent in April. That was below analyst estimates that Statistics Canada would report last month's headline inflation rate would be 1.6 per cent. The core inflation rate was 2.1 per cent, in line with estimates and down from 2.2 per cent in April.

Still to come:
(1 p.m. ET) Baker-Hughes rig count.

KEY STOCKS TO WATCH

Gun maker Smith & Wesson jumped 11.7 per cent in the premarket after the company reported better-than-expected quarterly sales.

Oracle rose 1.9 per cent in the premarket after the company reported better-than-expected quarterly revenue.

Other earnings today include: D-Box Technologies Inc

Also see: Friday's small caps to watch

With files from wire services

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