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Premarket: Stocks head for sharp gains Add to ...

North American stock markets are set to open sharply higher, as investors bet that recent worries that the U.S. Federal Reserve will soon taper bond purchases prompted a premature pullback in equity values. 

The two-day FOMC meeting will wrap up on Wednesday with a news conference from Chairman Ben Bernanke, in what will likely be the most important market event of the week. Mr Bernanke may very well continue to caution that he'll ease back on the unprecedented bond-buying program at some point. But the conditions he places on it will be key - and he'll likely emphasize that it'll be contingent on how future economic data come in. That should mean the tapering of bond purchases is not imminent.

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The backdrop overall this morning is constructive for equities. The Japanese yen softened overnight, allowing the ultra-volatile Nikkei of late to rally, and most other overseas markets have put in a strong performance today - at least so far. The 10-year U.S. Treasury bond yield continues to drift lower, quoted at about 2.13 per cent this morning - well off last week's high of 2.27 per cent. Higher rates at the longer end of the yield curve have been hindering the performance of income-producing securities such as REITs and preferred shares in recent days - but for now the pressure is lifting.

In commodities this morning, crude oil has edged up to another nine-month high amid speculation that the unrest in Syria may spread to other parts of the Middle East and threaten supplies. Reports this morning suggest U.S. President Barack Obama will soon authorize arming Syrian rebel groups.

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

MARKETS:

Equities:

Futures: S&P 500 +0.8 per cent; Dow +0.7 per cent; Nasdaq +0.9 per cent

Hong Kong's Hang Seng +1.22 per cent

Shanghai composite index -0.28 per cent

Japan's Nikkei +2.73 per cent

London’s FTSE 100 +0.66 per cent

Germany’s DAX +1.26 per cent

France's CAC 40 +1.49 per cent

Commodities:

WTI crude oil (Nymex July) +0.63 per cent at $98.47 (U.S.) a barrel

Gold (Comex Aug) -0.38 per cent at $1,382.30 (U.S.) an ounce

Copper (Comex July) -0.14 per cent at $3.20 (U.S.) a pound

Currencies:

Canadian dollar down 0.0003, or 0.03 per cent, at $0.9843 (U.S.)

Bonds:

U.S. 10-year Treasury yield 2.13 per cent, down 0.05

Canada 10-year government bond yield 2.12 per cent, down 0.02

ECONOMIC INDICATORS TO WATCH:

The New York Empire State manufacturing index came in at 7.84 in June, rebounding from -1.43 in May. A flat reading had been forecast by economists.

The number of existing homes that changed hands in Canada last month is 2.6 per cent lower last May.

(10 a.m. ET) The U.S. National Association of Home Builders reports on the housing market index.

STOCKS TO WATCH:

Brookfield Asset Management Inc. said it is selling its Longview forestry assets in the U.S. Pacific Northwest through deals totalling nearly $3.7-billion (U.S.).

THIS MORNING'S TOP INVESTING READS ON THE WEB:

Which way now for bonds? Bill Gross has some thoughts in this new Q&A.

The millennial generation, once thought to have abandoned equities after the crisis of 2008, are increasingly willing to take on investment risk.

Most economists don't expect the Fed to start tapering its bond-buying purchases until at least December.

Be careful about investing in broad emerging market funds, warns former Goldman Sachs chairman Jim O'Neill.

Legendary investor Jim Rogers shares his latest outlook on the bond "bubble," gold, agriculture and much more.

Three things investors should read - and three they should avoid.

Trying to make sense out of the biggest economic mystery of 2013: what's up with inflation?

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The premarket report is constantly updated to reflect the latest news developments and market moves. For instant headlines on breaking economic and corporate news in the premarket, follow Darcy Keith on Twitter at @eyeonequities.

 
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