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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.

The market situation for U.S. traders returning from the Martin Luther King holiday has improved dramatically since last Friday. A big relief rally is now underway, suggesting that Friday's panic selloff was a selling climax and with weak hands having been shaken out, the path appears to be clear for a rebound. The big question now is whether early gains can be sustained through the North American day to confirm the turnaround.

We now appear to be entering a phase where traders who had been selling on rumour or anticipating bad news are now moving in to cover shorts or scoop up bargains on the actual news.

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Chinese GDP and other reports came in slightly below expectations but not by a lot. GDP, for example, was 6.8 per cent vs. expectations of 6.9 per cent. This suggests an economy that is struggling but not collapsing, indicating the steep declines at the start of the year for mainland markets were overdone. Similarly, a cut this morning to the IMF's world GDP outlook has been shrugged off, as the recent selloff had probably already priced in expectations of an even bigger reduction.

Mainland China markets gained about 3.5 per cent on the day, sending a wave of relief through world markets that has sent a number of markets around the world up 2.0-2.5 per cent, including the Hang Seng, plus, the FTSE, DAX and other major continental indices. Dovish comments from Bank of England Governor Carney indicating that now is not the time for raising interest rates - pretty much ending speculation of a spring UK liftoff - has also helped to support European stocks. Interestingly, the oversold pound hasn't declined further, indicating the recent slide had already priced in speculation that liftoff would be deferred.

U.S. markets, which fell less than their overseas counterparts last week, are up a bit less this morning, with the Dow and S&P futures both rising about 1.5 per cent. Futures for the TSX 60 are indicating a triple-digit rally at the start of today's session.

Earnings season is picking up today so we could see action in a number of individual stocks. Results from Morgan Stanley were better than expected. Tiffany put out a profit warning but the reaction to that could be contained to itself as it has already become clear that this year's selling season was not very good for retailers.

Canadian stocks could also be active today, although an earlier rally this morning that saw gains in WTI and Brent oil of 3 per cent is running out of steam. The February NYMEX crude contract is flirting with the $30 (U.S.) level. Elsewhere,  Potash Corp. could struggle on news that it's suspending its New Brunswick operation.

The Canadian dollar is on the rebound today, rising in line with the Norwegian Krone and the Mexican Peso, which suggests the action so far is mainly oil driven. Speculation and reaction over whether or not the Bank of Canada will cut interest rates tomorrow could also keep the loonie active over the next two days.

Now, here is a closer look at key market data, and corporate and economic news.

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S&P 500 +1.6 per cent; Dow +1.6 per cent; Nasdaq: +1.7 per cent
TSX 60 +2.1 per cent

Hong Kong's Hang Seng +2.07 per cent
Shanghai composite index +3.23 per cent
Japan's Nikkei 225 +0.55 per cent
London's FTSE +2.11 per cent
Germany's DAX +2.13 per cent
France's CAC 40 +2.52 per cent

WTI crude oil (Nymex Feb) +0.61 per cent at $29.60 (U.S.) a barrel
Gold (Comex Feb) -0.39 per cent at $1,086.40 (U.S.) an ounce
Copper (Comex Mar) +2.80 per cent at $2.00 (U.S.) a pound


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Canadian dollar +0.0045 at 69.17 cents (U.S.)
U.S. dollar index +0.249 at 99.205

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

(10 a.m. ET) U.S. NAHB Housing Market Index for January.


U.S.-based solid waste collection company Waste Connections Inc it agreed to buy Canada's Progressive Waste Solutions Ltd for $2.67 billion to expand in Canada. The $24.55 per share offer represents a premium of 4.4 percent to the closing price of Progressive Waste's U.S.-listed stock. The combined company, which will have pro-forma revenue of about $4.1 billion, will be domiciled in Canada after the deal closes in the second quarter of 2016.

Potash Corporation of Saskatchewan plans to indefinitely suspend production at its Picadilly operations in New Brunswick after a slump in the price of the commodity. The move will cut its New Brunswick work force by about 420 to 430. Potash Corp. said the suspension will allow it to focus on lower-cost operations.

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Brookfield Asset Management Inc., Canada's largest alternative asset manager, made an unsolicited offer to acquire U.S. shopping-mall owner Rouse Properties Inc. for about $657 million. Brookfield, which already owns about a third of Rouse, said it would pay $17 a share for the remainder in an all-cash transaction. The offer is 26 percent more than Rouse's closing price on Friday. The deal, which values the real estate investment trust at about $986 million.

Bank of America Corp reported a 9.8 percent rise in profit for the final quarter of the year, helped by lower expenses even as revenue growth remained sluggish. BofA, the No. 2 U.S. bank by assets, said its net income attributable to common shareholders rose to $3.01 billion, or 28 cents per share, in the three months ended Dec. 31, from $2.74 billion, or 25 cents per share, a year earlier. Non-interest expenses fell 2.3 percent to $13.87 billion. Analysts on average had expected earnings of 26 cents per share, according to Thomson Reuters I/B/E/S. It was not immediately clear if the figures reported on Tuesday were comparable.

Morgan Stanley swung back to a profit in the fourth quarter, helped by lower legal costs. The New York-based investment bank said Tuesday it had a profit of $908 million in the three month period ending in December, or 39 cents per share. That's compared to a loss of $1.6 billion, or $1.37 per share. Removing an adjustment tied to the value of Morgan Stanley's debt, the bank earned $986 million, or 43 cents per share. Analysts were looking for Morgan Stanley to earn 33 cents per share, according to FactSet. Morgan Stanley shares rose 3.5 per cent in pre-market trading.

Delta Air Lines Inc on Tuesday reported fourth-quarter profit slightly below analysts' expectations and forecast that passenger unit revenue will continue to decline in early 2016 amid "international volatility" and currency pressures. The Atlanta-based airline earned $980 million in the fourth quarter. On an adjusted basis, it grew profit by 43 percent to $926 million, or $1.18 per diluted share. Analysts on average estimated Delta would earn about $928 million, or $1.19 per diluted share, according to Thomson Reuters I/B/E/S.

Healthcare conglomerate Johnson & Johnson said it would cut about 3,000 jobs within its medical devices division, or between 4 percent and 6 percent of the unit's global workforce, over the next two years. The company said on Tuesday that it expected to record pre-tax restructuring charges of $2.0 billion to $2.4 billion in connection with these plans, of which about $600 million will be recorded in the fourth quarter of 2015. J&J also reiterated its full-year 2015 forecast.

Upscale jeweler Tiffany & Co's holiday season sales fell 6 percent, hurt mainly by a stronger dollar and a drop in spending by tourists in the United States. The company's shares were down 3.7 percent at $65.10 in premarket trading on Tuesday.

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Other earnings today include: Charles Schwab Corp., Comerica Inc., eBay Inc., International Business Machines Corp., Kinder Morgan Inc., Morgan Stanley, Nautilus Inc., Netflix Inc., Unitedhealth Group Inc., Woodward Inc.

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


Canaccord Genuity downgraded Bellatrix Exploration to "hold" from "buy" and cut its price target to $1.75 (Canadian) from $2.25.

Canaccord Genuity upgraded Labrador Iron Ore Royalty to "buy" on year-to-date share price declines, and lowered its price target to $10 (Canadian) from $11.

Canaccord Genuity downgraded Rock Energy to "speculative buy" from "buy" and cut its price target to $2 (Canadian) from $2.50.

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