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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.

Results of the Brexit vote are rattling global financial markets again as a new trading week kicks off.

Monday's market reaction has been somewhat more patch than Friday's turmoil, though, as the initial knee-jerk reaction fades and traders focus on implications for different markets.

Stock market performance has been very mixed. Japan's Nikkei finished up 2.3 per cent while Shanghai and Australia also finished in the green. In Europe, the FTSE is down another 1.3 per cent, less than a 1.6 per cent drop in the Dax. Spain's IBEX, which was really hammered Friday, is down less, falling 1 per cent after the incumbent euro friendly People's Party gained seats in the new parliament at the expense of Euroskeptic parties. In North America, U.S. index futures are down about 0.6 per cent and TSX 60 futures are down about 0.9 per cent.

Among stocks, pressure remains focused on the banking sector, seen as vulnerable to political uncertainty. Unelected EU officials appear bent on pushing Britain out the door as fast as possible, seemingly in order to punish Britons for daring to believe in democracy and oppose them. Elected officials like German Prime Minister Angela Merkel and Leave spokesperson Boris Johnson aren't in as much of a rush, indicating cooler heads may eventually prevail, especially since both sides will still need to deal with each other after the divorce.

U.K. Chancellor George Osborne also toned down his negative rhetoric today, dropping his plan for an emergency austerity budget. For now, there still appears to be quite a bit of political turmoil with the Conserva‎tives looking for a new leader, an open revolt against the Labour Leader underway, and Scotland hinting at another referendum, which also leans toward a longer, more orderly Brexit process.

Currency markets are mixed today. The British pound continues to weaken as traders search for a new level. The Japanese yen is up against the pound and euro but steady against the U.S. dollar. Gold is up again. Resource currencies like the Canadian dollar and Australian dollar have stabilized along with commodity prices. So far, most central banks have not openly intervened in the markets but it remains a possibility. This suggests that while we're still seeing some capital flows out of Europe and toward havens like gold and the yen, other markets have started to stabilize already.

It's a fairly quiet day ‎for economic news, so Brexit and the Spanish results may continue to dominate trading. Markets may remain choppy through the week as they continue to adjust to last week's big decision.

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 -0.61 per cent; S&P 500 -0.61 per cent; Nasdaq: -0.76 per cent; TSX 60: -0.94 per cent

Equities
Japan's Nikkei +2.39 per cent
Shanghai composite index +1.44 per cent
Hong Kong's Hang Seng -0.16 per cent 
Germany's DAX -2.26 per cent
London's FTSE -1.70 per cent
France's CAC 40 -2.04 per cent

Commodities
WTI crude oil (Nymex Aug) -0.69 per cent at $47.31 (U.S.) a barrel
Gold (Comex Aug) +0.88 per cent at $1,334.00 (U.S.) an ounce
Copper (Comex July) +0.33 per cent at $2.1175 (U.S.) a pound

Currencies
Canadian dollar +0.16 at 76.86 cents (U.S.)
U.S. dollar index +0.928 at 96.376

Bonds
Canada 10-year bond yield -0.037 at 1.126 per cent

KEY ECONOMIC RELEASES

U.S. goods trade deficit for May widened to $60.6 billion. Consensus was for $59.5-billion.
(10:30 a.m. ET) U.S. Dallas Fed Manufacturing Activity for June.

KEY STOCKS TO WATCH

Medtronic Plc will buy HeartWare International Inc, a maker of advanced heart failure devices, in a deal valued at about $1.1 billion, the companies said on Monday. Under the terms of the deal, Medtronic will buy HeartWare common stock for $58 per share, in cash. The offer represents a 93.5 per cent premium to HeartWare's Friday close of $29.98.

Cruise operator Carnival Corp's shares fell 4.9 per cent to $43.41 in the premarket after analystts at Susquehanna cut their price target. The stock was the biggest loser among S&P 500 components.

Earnings include: NovaGold Resources Inc.

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

With files from wire services

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