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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 Wednesday morning to you. Equity markets are once again poised to open in the green, with futures in positive territory. Dow futures are up 109 points, S&P 500 futures are higher by 13 points, and Nasdaq futures are higher by 34 points.

In Canada, S&P/TSX 60 index futures are higher by 4 points. Bombardier shares could be a big mover again today - and probably to the downside. The company and European plane maker Airbus Group NV confirmed late Tuesday that they held talks about "certain business opportunities" - but said they ended those discussions. The stock jumped 15 per cent in Tuesday afternoon trading after Reuters first reported that the talks were held.

Overseas in the Pacific Rim, markets closed higher across the board. In Japan, the Nikkei 225 advanced 0.8 per cent. The Bank of Japan left monetary policy unchanged, as expected. Further easing is anticipated to potentially occur at the Oct. 30 meeting when the central bank releases its semi-annual outlook.

In Korea, the KOSPI also gained 0.8 per cent, and down under in Australia, the S&P/ASX 200 index advanced by 0.6 per cent. Chinese markets remain closed on holiday. Shares of Samsung gained nearly nine percent after reporting better-than-expected guidance for the third-quarter.

Major European markets are firmly in positive territory. The German DAX, France's CAC, and U.K.'s FTSE are up by one per cent, 0.7 per cent, and 0.5 per cent, respectively.

Commodities, in particular oil and gold, delivered solid gains on Tuesday. The price of oil advanced nearly 5 per cent to close at $48.53 (U.S.) and West Texas Intermediate oil futures are over $49 this morning. On Tuesday, the American Petroleum Institute reported a decline in crude oil inventory levels by 1.2 million barrels. Watch for the weekly oil inventory report from the U.S.  Energy Information Administration due out at 10:30 a.m.(EST). If inventory levels reflect lower U.S. production and lower inventory levels, the price of oil could shoot above $50. The price of gold advanced 1 per cent and is currently just below the $1,150 level. The price of natural gas futures remain below $2.50 (U.S.) at $2.47.

Here's the bottom line. With Chinese markets closed and the lack of major economic and corporate earnings reports due out this  week, it is likely to be a relatively calm week for equity markets. Don't be fooled by the positive gains in recent days in the markets, as volatility is likely to resume. Next week, Chinese September economic releases could raise economic growth concerns as reports on import and export data, retail sales, industrial production and third-quarter GDP, may cause volatility to return to the markets.

On Tuesday, the S&P/TSX composite index delivered a 95-point gain, rising 0.7 per cent; however, the strength was isolated to energy and gold stocks - the laggards for the year. Only 57 per cent of stocks in the index, and four of the 10 sectors, closed in positive territory. When the laggards are the leaders, and there is a lack of a broad based rally in the markets, it does not give me a lot of conviction in the rally.

That being said, I am not expecting markets to fall sharply lower and believe the majority of the losses are behind us. Generally, the month of October has been a moderately positive month for the S&P/TSX composite index. Looking back to the year 2000, during 10 of the past 15 years, the TSX index has finished the month with a positive return for investors. If we exclude the recession years 2008 and 2009, the average return is just over 1 per cent - modest, but at least positive.

One bright spot is commodities. In the near-term, oil looks set to break out over $50 (U.S.)  and $47  is the new support level for the commodity price. It appears that the worst is over for the price of oil and we will not see prices return to the $30s.

Now, here is a closer look at major markets, and economic and corporate news.

MARKET DATA:

Futures

S&P 500 +0.6 per cent; Dow +0.6 per cent; Nasdaq: +0.7 per cent

Equities
Hong Kong's Hang Seng +3.13 per cent
Shanghai composite index Closed
Japan's Nikkei +0.75 per cent
London's FTSE 100 +0.47 per cent
Germany's DAX +0.93 per cent
France's CAC 40 +0.65 per cent
Stoxx 600 +0.44 per cent

Commodities
WTI crude oil (Nymex Nov) +2.10 per cent at $49.55 (U.S.) a barrel
Gold (Comex Dec) +0.19 per cent at $1,148.70 (U.S.) an ounce
Copper (Comex Dec) +1.13 per cent at $2.38 (U.S.) a pound

Currencies
Canadian dollar +0.0018 at 76.90 cents (U.S.).
U.S. dollar index -0.005 at 95.45

Bonds
U.S. 10-year Treasury yield 2.08 per cent, +0.04

ECONOMIC INDICATORS:

The value of Canadian building permits issued in August unexpectedly fell by 3.7 percent from July on a decline in construction intentions in several provinces, Statistics Canada data indicated on Wednesday. Market analysts had expected the value of permits to increase by 0.8 percent. Statscan revised July's data to show a 0.7 percent increase from June after initially reporting a 0.6 percent decline.

(3:30 p.m. ET) U.S. consumer credit for August. Consensus is $19-billion, down from $19.1-billion in July

CORPORATE NEWS:

Bombardier shares could come under significant pressure today after the company and European plane maker Airbus Group NV confirmed late Tuesday that they held talks about "certain business opportunities" - but said they ended those discussions. The stock jumped 15 per cent in Tuesday afternoon trading after Reuters first reported the talks. Bombardier issued a news release after markets closed saying the discussions had ended, leaving the Canadian plane maker facing dwindling options to keep alive its dream of competing in the aerospace big league.

Canadian Oil Sands has adopted a poison pill in response to Suncor's takeover offer.

Anheuser-Busch InBev, the world's largest brewer, launched an improved offer for SABMiller, offering just over 68 billion pounds ($104-billion U.S.) for its largest rival to extend its reach into Africa and other markets.

Yum Brands slumped 16 per cent in the premarket after it cut its full-year profit forecast due to a slower-than-expected recovery in China and a strong dollar. McDonald's, which is also facing issues in China, fell 1.5 percent.

Adobe fell 3 per cent after lowering its 2016 profit forecast due to a strong dollar.

Freeport-McMoRan rose 3 in the premarket, extending gains from Monday when the copper and gold miner said it is considering exiting the oil and gas business.

Franco-Nevada has agreed to make a $650-million (U.S.) advanced payment this month to Teck Resources in return for a 22.5 per cent share of the silver produced by the Antamina joint venture in Peru.

B2Gold Corp. has halted operations at its El Limon Mine in Nicaragua after violence linked to an ongoing blockade left a national police officer dead and several people injured.

Earnings include: Acuity Brands Inc.; Bankers Petroleum Ltd; Colabor Group Inc; Constellation Brands Inc; EXFO Inc; Firan Technology Group Corp; Global Payments Inc.; Monsanto Co; RPM International Inc.

ANALYST ACTIONS:

Raymond James downgraded Western Energy Services to "underperform" from "market perform" and maintained a $5 (Canadian) price target.

Due to attractive valuations in the real estate sector, Raymond James upgraded Allied, Artis, CREIT, Killam, and Tricon from "outperform" to "strong buy" and ioCan from a "market perform" to "outperform."

BMO Nesbitt Burns downgraded Alacer Gold to "underperform" from "market perform" with a price target of $3 (Canadian).

BMO Nesbitt Burns downgraded Detour Gold to "market perform" from "outperform" with a price target of $16 (Canadian).

RBC Dominion Securitiese upgraded Morgan Stanley to "outperform" from "sector perform". The bank is up 1.5 per cent in the premarket.

QUOTE OF THE DAY:

"Do not seek to follow in the footsteps of the wise. Seek what they sought."  Matsuo Basho

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