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Jennifer Dowty

Jennifer Dowty, Chartered Financial Analyst, writes exclusively for Globe Unlimited subscribers. The Before the Bell report is updated throughout the premarket to reflect latest developments.

Good Tuesday morning to you! North American futures are higher this morning but off from earlier highs. European finance ministers as well as other leaders from the continent are meeting today, but whether Greece will come to the negotiating table with reasonable proposals is yet to be seen.

The price of oil ticked back up over $53 (U.S.) per barrel earlier this morning but has since backed down and is below that level at last check. Iran nuclear negotiations continue, with a midnight deadline fast approaching. This 'soft' deadline is likely to be extended as all parties appear willing to continue discussions should progress be seen.

Oil declined more than 7 per cent Monday and has stabilized this morning. A potential nuclear deal was one factor that put pressure on the price of oil. The strengthening U.S. dollar, recent reports of strong OPEC production, rising U.S. inventory levels, and a Chinese economic slowdown all put pressure on the commodity. The next technical support level is around $52.30.

However, Wednesday could be another volatile day for oil, with the weekly U.S. inventory data due out from the U.S. Energy Information Administration. Last week, the report showed an increase in U.S. crude oil inventories by 2.4 million barrels, while the Street was anticipating a decline. The energy report will be released Wednesday at 10:30 a.m. with a decline expected.

Right now, the energy sector is the worst performing sector in the S&P/TSX composite index year to date, and I continue to recommend avoiding the sector. However, at some point, I suspect we will see merger and acquisition activity increase in the energy patch, percolating investor interest in the sector. For now, I continue to believe it is premature to accumulate positions, especially ahead of what could be a disappointing earnings season for energy stocks.

Major European markets were higher earlier in the day and have turned increasingly negative during the trading day. The German, London, and French markets are all down by less than 1 per cent as investors wait to see how talks are progressing with Greece.

Overseas, Chinese markets resumed their downdraft today. The Shanghai Stock Exchange composite index fell 1.3 per cent and the Shenzhen Stock Exchange composite index declined 5.3 per cent. Today, the Shanghai Index was down at one point by over 5 per cent as the intraday volatility continues to  be intense.

This instability in the Chinese markets is despite efforts taken by the central bank and state regulators to calm the markets. Chinese Premier, Li Keqiang stated that, "China has the confidence and ability to deal with the risks and challenges faced by its economy." Despite the Premier's message, markets fell again today. The Shanghai Stock Exchange has dropped 28 per cent in less than a month.

The Bottom Line: Today will be a pivotal day in Greece. While I do not expect a deal to be reached today, the tone of the meetings is what will be important as a gauge of how discussions are proceeding and whether the likelihood of a deal being achieved in the days ahead is increasingly possible.

Now, here's a closer look at the market numbers and what else is going on this morning.

MARKET DATA:

Futures

S&P 500 +0.2 per cent; Dow +0.2 per cent; Nasdaq: +0.1 per cent

Equities
Hong Kong's Hang Seng -1.04 per cent
Shanghai composite index -1.30 per cent
Japan's Nikkei +1.32 per cent
London's FTSE 100 -0.24 per cent
Germany's DAX -0.70 per cent
France's CAC 40 -0.97 per cent
Stoxx 600 -0.44 per cent

Commodities
WTI crude oil (Nymex Aug) -0.23 per cent at $52.41 (U.S.) a barrel
Gold (Comex Aug) -0.73 per cent at $1,164.60 (U.S.) an ounce
Copper (Comex Sep) -2.48 per cent at $2.48 (U.S.) a pound

Currencies
Canadian dollar at 78.49 (U.S.), -0.0057
U.S. dollar index +0.867 at 97.165

Bonds
U.S. 10-year Treasury yield 2.25 per cent, -0.04

ECONOMIC INDICATORS:

Canada merchandise trade deficit was $3.34-billion in May, more than the estimated $2.5-billion.
U.S. trade deficit widened in May to $41.9-billion, less than economists' estimates that averaged $42.6-billion.

STOCKS TO WATCH:

Denison Mines Corp. has agreed to buy Fission Uranium Corp. in a $500-million deal that will give the Lundin family control over a large uranium discovery in the Athabasca Basin. Denison, which is controlled by mining tycoon Lukas Lundin, is offering the equivalent of $1.25 for every Fission share.

The Jean Coutu Group (PJC) Inc. reported EPS of 27 cents in the quarter ended May 30, while revenue rose 3.5 per cent from a year ago to $712.4-million. The Street was expecting EPS of 30 cents on revenue of $646.43-million.

Other earnings today include: NovaGold; Helen of Troy; The Container Store Group.

Advanced Micro Devices shares slumped 13 per cent in the premarket after the chipmaker cut its quarterly revenue forecast citing weaker-than-expected PC demand.

Horizon Pharma was up 5.5 per cent after it made a hostile bid to buy Depomed in a deal valued at about $3-billion (U.S.).

ANALYST ACTIONS:

Canaccord Genuity downgraded Granite REIT to "hold" from "buy" and cut its price target to $44 (Canadian) from $46.25.

QUOTE OF THE DAY:

"Life is like a camera. Just focus on what's important, capture the good times, develop from the negatives, and if things don't turn out- take another shot" - Unknown

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