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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.

We've had big swings in world markets overnight but this morning once again finds stocks trading mixed with the Dax down 0.9 per cent and the FTSE down 0.2 per cent. U.S. index futures are up 0.2 per cent but are down from overnight highs. Asia Pacific markets finished in the green with the Hang Seng up 1.1 per cent and the Nikkei up 0.8 per cent.

The initial reaction to last night's debate was a feeling that Hillary Clinton won which sent stocks higher initially. The euphoria quickly faded suggesting it was a bear market bounce.

Traders appear to have recognized that even though she scored a number of points, there weren't any big surprises either. She didn't appear to score a knockout blow, and Donald Trump didn't completely implode so this race is likely to go right down to the wire.

Mr. Trump did make a number of points relevant to market players, accusing the Fed and chair Janet Yellen of keeping interest rates artificially low to help the Democrats and of creating a bubble in the stock market.

Mr. Trump‎ also was antagonistic toward trade deals, particularly NAFTA and Mexico. The Mexican peso staged a huge 2 per cent pop after the debate but as with stocks, the initial bounce has faded. Interestingly, the Canadian dollar, the currency of America's largest trading partner, was unaffected by the debate and was trading flat overnight.

The big question for traders in the coming days is if Ms. Clinton has been able to stop the momentum Mr. Trump has gained over the summer. Also the lessons from this year's Brexit vote and last year's U.K. election showed that polls aren't always accurate.

Historically conservatives in different countries have polled 2 to 3 per cent lower than their actual support. Given the negative attacks against him and his supporters, this difference could be even bigger for Mr. Trump. The quick end to the Clinton bounce suggests that some traders recognize this and are not as complacent as they were before the debate.

Historically, as a general rule of thumb, conservatives in different countries have tended to poll 2 to 3 per cent lower than their actual support. Given the negative attacks against him and his supporters, this difference could be even bigger for Mr. Trump. The quick end to the Clinton bounce suggests that some traders are not as complacent about a victory at the polls by Ms. Clinton as they were before the debates. A close contest could lead to higher market volatility and increased trading opportunities over the next six weeks.

There's a lot of other news moving the markets this morning too. German stocks are under pressure again with Deutche Bank and Volkswagen in the crosshairs over their exposure to big fines in the U.S. with the prospects of German government support negligible.

Italian stocks are also sliding with the FTSEMIB down 1.0 per cent. Prime Minister Matteo Renzi finally set a date for an upcoming referendum for Dec. 4, apparently to give him more time to sell his side. Expectations had been for this vote to be in October. If the first move of a campaign is to stall and delay, one has to think PM Renzi's side may be in trouble already, particularly since its been widely speculated he may have to resign if he loses to the euroskeptics.

Crude oil continues its seesaw action of one day up and one day down. West Texas Intermediate and Brent are down 1.5 per cent or more, giving up much of Monday's gains after Iran indicated it's at the Algeria conference to talk, not to make a deal, and ‎that it's not prepared to freeze production.

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

MARKET DATA:

Futures (as of about 7:30 a.m. ET)

Dow +0.16 per cent; S&P 500 +0.21 per cent; Nasdaq: +0.20 per cent; TSX 60 +0.02 per cent

Equities
Japan's Nikkei +0.84 per cent
Shanghai composite index +0.59 per cent
Hong Kong's Hang Seng +1.09 per cent 
Germany's DAX -0.90 per cent
London's FTSE -0.23 per cent
France's CAC 40 -0.59 per cent

Commodities
WTI crude oil (Nymex Nov.) -1.92 per cent at $45.06 (U.S.) a barrel
Gold (Comex Dec.) -0.34 per cent at $1,339.70 (U.S.) an ounce
Copper (Comex Dec.) -1.02 per cent at $2.18 (U.S.) a pound

Currencies
Canadian dollar -0.04 at 75.53 cents (U.S.)
U.S. dollar index +0.09 at 95.39

Bonds
Canada 10-year bond yield -2.11 at 0.9679 per cent

KEY ECONOMIC RELEASES

Bank of Japan minutes from July 28-29 meeting
China industrial profits
Euro area M3 money supply

(9 a.m. ET) U.S. S&P Case-Shiller Home Price Index (20 city) for July. Consensus is a decline of 0.1 per cent from June and a rise of 5.0 per cent year over year.

U.S. single-family home prices rose slightly less than expected on an annual basis in July, and the year-over-year gain was smaller than in the prior month, a survey showed on Tuesday. The S&P CoreLogic Case-Shiller composite index of 20 metropolitan areas rose 5 per cent in July on a year-over-year basis, retreating from the 5.1 per cent climb in June and short of the estimate calling for a 5.1 per cent increase from a Reuters poll of economists.

(9:45 a.m. ET) U.S. Markit Services/Composite PMI
(10 a.m. ET) U.S. Conference Board Consumer Confidence Index for September. Consensus is 98.8, down from 101.1 in August.

KEY STOCKS TO WATCH

Twitter remains in the spotlight amid the continuing speculation that it is moving closer to being sold. Walt Disney and Microsoft are the latest companies to be mentioned as possible Twitter suitors. Twitter is down 0.13 per cent in premarket trading.

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General Motors of Canada Co. stands to be eligible for more than $200-million in funding from the federal and Ontario governments after agreeing to spend $550-million at factories in Oshawa and St. Catharines. The federal government's Automotive Innovation Fund and Ontario's Jobs and Prosperity Fund each offer as much as 20 per cent to auto makers and other companies that invest in new or existing facilities. If the entire investment the car company is making in an assembly plant in Oshawa and an engine plant in St. Catharines qualifies for the programs, GM Canada would be in line for $220-million.

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Amazon.com Inc. is raising the stakes in Canada's e-commerce landscape by launching free same-day delivery for its Prime members in Toronto and Vancouver just ahead of the busy holiday shopping season. Starting on Tuesday, Amazon is offering free same-day deliveries on orders over $25 of one million items in Toronto and 700,000 in Vancouver, ranging from everyday household goods such as coffee makers, snacks, drinks and shampoo to toys, electronics and luggage.

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Two Canadian cable giants are closing down Shomi, the video streaming service launched as a joint venture less than two years ago, after viewers failed to show enough interest. Shomi is jointly owned by Rogers Communications Inc. and Shaw Communications Inc., and was billed as a foothold against Netflix Inc.'s challenge to traditional television. But it struggled out of the gate in the face of stiff competition and will go dark on November 30.

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Kite Pharma jumped 12 per cent to $61.59 (U.S.) after the company said its experimental CAR T-cell therapy, which helps the immune system fight cancer, was highly effective in treating aggressive non-Hodgkin lymphoma.

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Pipeline operator Sunoco dropped 7.1 per cent to $27 (U.S.)after it agreed to buy Vitol Group's crude oil unit in Permian Basin in West Texas for $760-million.

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Credit Suisse downgraded the stock of food producer JM Smucker to "neutral" from "outperform," saying it underestimated the level of reinvestment needed to boost the company's pet food division.

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Autoparts retailer AutoZone was upgraded to "overweight" from "equal-weight" at Morgan Stanley, which pointed to an increase in the number of older vehicles.

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Drugmaker Eli Lilly was raised to "buy" from "neutral" at Goldman Sachs, citing the potential of significant revenue and earnings growth as well as margin expansion due to its diversified late-stage product pipeline.

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Cruise line operator Carnival's latest earnings report beat Street estimates and raised its full-year forecast.

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Medical products maker Boston Scientific announced the acquisition of EndoChoice Holdings for $8 a share, or $210 million in cash. EndoChoice makes imaging systems and other medical technology devices.

Earnings include: Cintas Corp.; FactSet Research Systems Inc.; IHS Markit Ltd.; Nike Inc.

With files from wire services

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