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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.

Stock markets around the world have been declining to start the first full week of the Trump Administration as the potential risks to global politics and trade from his policies become more apparent.

Capital is flowing back into defensive havens following weekend developments, with gold and the yen gaining ground again. ‎The British pound is particularly strong outpacing the euro to the upside on the back of a roaring U.K. economy and the potential for closer ties between the U.K. and U.S.  The Nikkei is down 1.3 per cent on the currency rally while the FTSE and Dax are down 0.4 per cent.

U.S. index futures are down as much as 0.2 per cent. In addition to political news, this week is the heart of earnings season with reports due from Boeing, Caterpillar, Google, Microsoft, Intel and many many other big companies. So far, strong reports have met with limited upside response, while profit warnings have been punished severely. This indicates market expectations remain high with strong growth already priced in and the potential for negative surprises higher.

Following on from the "America First" comments in his inauguration speech, U.S. President Donald Trump indicated over the weekend that the first world leader he plans to meet in person is U.K. Prime Minister Theresa May this Friday. He also plans to meet with Mexico's President Enrique Pena Nieto and Canadian Prime Minister Justin Trudeau shortly to discuss NAFTA, indicating that the first phase of his economic plan is going to be try and change trade relationships. The Canadian dollar and Mexican Peso have bounced back a bit from depressed levels on the sense that Mr. Trump is at least willing to talk before ripping up NAFTA, but that could be short-lived relief, we'll see.

President Trump also spent time on the weekend bickering with the media and others over the size of the crowd at his inauguration and ‎facing major protests. This reminds the market that there are a lot of potential distractions and opposition which could delay -- if not block -- his efforts, raising the risks for markets like U.S. stocks and the U.S. dollar that had recently priced Trump to perfection.

‎Commodity markets are mixed today. Metals are climbing with copper up 0.6 per cent and aluminium up 1.0 per cent. Crude oil is taking a hit falling 1.2 per cent. Traders remain concerned about the potential increasing U.S. exploration activity could lead to increased production as Friday's Baker Hughes drill rig count was a crossover week, the first time in a very long time that the number of active rigs was up over the same week a year ago. This prospect has overshadowed reports that 80 per cent of promised OPEC production cuts have been implemented, running ahead of schedule and that processes for monitoring and meetings to discuss progress have been set up.

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 8:30 a.m. ET)

Dow -0.14 per cent; S&P 500 -0.22 per cent; Nasdaq: -0.22 per cent; TSX 60 -0.08 per cent

Equities
Japan's Nikkei -1.29 per cent
Shanghai composite index +0.43 per cent
Hong Kong's Hang Seng +0.06 per cent 
Germany's DAX -0.28 per cent
London's FTSE -0.38 per cent
France's CAC 40 -0.16 per cent

Commodities
WTI crude oil (Nymex Feb.) -1.15 per cent at $52.61 (U.S.) a barrel
Gold (Comex Feb.) +0.74 per cent at $1,213.80  (U.S.) an ounce
Copper (Comex March) +0.57 per cent at $2.64 (U.S.) a pound

Currencies
Canadian dollar +0.29 at 75.27 cents (U.S.)
U.S. dollar index +0.01 at 101.19

Bonds
Canada 10-year bond yield +0.15 at 1.73 per cent

KEY ECONOMIC RELEASES

Japan all industry activity index and leading index
Euro Area consumer confidence
ECB president Mario Draghi speaks in Italy

(8:30 a.m. ET) Canada wholesale trade for November. The estimate is an increase of 0.5 per cent from October.

KEY STOCKS TO WATCH

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

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McDonald's Corp's U.S. comparable restaurant sales fell less than analysts had expected in the fourth quarter as strong demand for its all-day breakfast brought more people to its restaurants. Sales at established McDonald's restaurants in the United States declined 1.3 per cent in the three months ended Dec. 31, hurt in part by the high bar set by the debut of the all-day breakfast in October, 2015. Analysts on average were expecting a drop of 1.4 per cent, according to research firm Consensus Metrix.

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The largest shareholder of Brookfield Canada Office Properties is offering to buy the rest of the real estate trust's equity for $30.10 cash per unit, a 14.8 per cent premium to Friday's closing price in Toronto. Brookfield Property Partners LP says its purchase of the remaining BOX units would simplify BPY's structure and fully integrate the company's North American office operations.

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Halliburton slipped 0.27 percent to $56.30 premarket after the world's No. 2 oilfield services provider reported a bigger loss in the latest quarter.

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Perrigo was off 1.7 percent at $73.76 after Jefferies cut its price.

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Consumer goods packaging company Silgan Holdings Inc. said it would acquire WestRock Co.'s specialty closures and dispensing systems business for about $1 billion.

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U.S. supermarket operator Kroger Co. said on Monday it would fill 10,000 permanent positions in its supermarket divisions.

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Samsung Electronics Co. Ltd. indicated on Monday that its latest flagship Galaxy S smartphone could be delayed as it pledged to enhance product safety following an investigation into the cause of fires in its premium Note 7 devices.

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Merck and Bristol-Myers Squibb have resolved a patent dispute over the cancer drug Keytruda. Merck will pay $625 million to Bristol-Myers and pay royalties for non-exclusive marketing rights to the drug.

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Volkswagen has been added to the "Conviction Buy" list at Goldman Sachs, saying the settlement with U.S. regulators over its diesel emissions issue should allow it to refocus on the automaker's fundamentals.

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Verizon was downgraded to "market perform" from "outperform" at Wells Fargo, which said a recent outperformance by the stock is not sustainable and that consensus 2017 revenue estimates are too high.

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Earnings include: Brown & Brown Inc.; Centerra Gold Inc.; Halliburton Co.; McDonald's Corp.; Yahoo! Inc.; Zions Bancorp.

With files from wire services

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