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Before the Bell: TSX to rise ahead of Trump, Trudeau meeting

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 remain well supported to start the week after last week's record highs. U.S. index futures‎ and the FTSE are flat to up slightly, while the Dax is up 0.9 per cent. In currency action, the U.S.dollar is up slightly against gold and the majors. Sterling is the top performer, posting gains against U.S. dollar, euro and yen as traders digest last week's passage of the Brexit bill by a big majority through the House of Commons with no amendments. Debate in the House of Lords is scheduled to start next Monday.

The biggest action so far today has been in base metal commodities which continue to benefit from last week's strong China trade report which has shifted resource demand expectations upward. Nickel is up 3.6 per cent while copper is up 0.6 per cent. This appears to bode well for base metal stocks and the Canadian market especially since the similarly weighted to resources Australian market posted a 0.7 per cent gain overnight.

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Canada trading, particularly the loonie may also attract a lot of attention today on political developments. ‎Canadian Prime Minister Justin Trudeau is off to Washington to meet with U.S. President Donald Trump today. Trade is at the top of the agenda with the new U.S. administration looking to renegotiate or rip up NAFTA. The concern is that even though Trump is targeting Mexico, Canada could get sideswiped in trade disputes. Energy may also come up with the approval process for Keystone XL back up and going.

The big question is whether the two leaders will get along or not and how that could impact relations. The bearish case would say there could be trouble because Mr. Trudeau was close to former President Barack Obama. On the other hand, Mr. Trudeau seems to be pretty good at seeing which way the wind is blowing, dumping unpopular ideas and political liabilities overboard, like electoral reform and the latest cabinet reshuffle and focusing on top priorities. Also a positive, President Trump's meeting with Japanese Prime Minister Shinzo Abe seems to have gone well with U.S. Vice-President Mike Pence to continue engagement and no flareups over trade and currency values.

So, we'll see soon enough. Around the meeting, pipeline stocks like Transcanada and auto stocks like Magna International could attract particular attention from traders.

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

MARKET DATA:

Futures (as of about 7:40 a.m. ET)

Dow +0.25 per cent; S&P 500 +0.16 per cent; Nasdaq: +0.11 per cent; TSX 60 +0.14 per cent

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Equities
Japan's Nikkei +0.41 per cent
Shanghai composite index +0.64 per cent
Hong Kong's Hang Seng +0.58 per cent 
Germany's DAX +0.89 per cent
London's FTSE +0.11 per cent
France's CAC 40 +1.19 per cent

Commodities
WTI crude oil (Nymex March) -0.37 per cent at $53.66 (U.S.) a barrel
Gold (Comex April) -0.42 per cent at $1,230.70 (U.S.) an ounce
Copper (Comex March) +0.56 per cent at $2.78 (U.S.) a pound

Currencies
Canadian dollar -0.12 at 76.36 cents (U.S.)
U.S. dollar index -0.09 at 100.71

Bonds
Canada 10-year bond yield -0.16 at 1.71 per cent

KEY ECONOMIC RELEASES

Japan real GDP
China foreign direct investment, aggregate yuan financing, new yuan loans and M2 money supply

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U.S. consumer price index revisions

Also: Canadian prime minister Justin Trudeau meets with U.S. president Donald Trump in Washington

KEY STOCKS TO WATCH

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

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Home Capital Group Inc. says it received an enforcement notice from the Ontario Securities Commission after markets closed on Thursday. In a release after markets closed on Friday, the company said the notice is related to its disclosure in 2014 and 2015 regarding the impact its findings that income information submitted on some loan applications had been falsified and steps it took after, including suspending brokers and brokerages.. Home Capital said it intends "to respond and to continue to cooperate with OSC staff. The company believes that its disclosure satisfied applicable disclosure requirements."

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Restaurant Brands International Inc., the owner of Burger King and Tim Hortons, reported a quarterly profit that more than doubled from a year ago, when it recorded a one-time charge related to the merger of the two brands. Its shares were up 2 per cent in premarket trading.

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Heavy rains have cut access in and out of the Ravensthorpe nickel-producing operations in Western Australia, owner First Quantum Minerals said.

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Teva's U.S.-listed shares rose 4.6 percent to $33.69 in premarket trading after the Israeli drugmaker reported a better-than-expected fourth-quarter profit.

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Caterpillar was up 0.8 percent at $97.14 after Evercore ISI raised its rating on the stock, a trader said.

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Macy's rose 2.4 percent after Barron's said on Sunday that the department store chain operator could see its shares rise by 50 percent in a potential sale.

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Dow component Verizon slipped 1.5 percent after the network carrier said it would reintroduce its unlimited data plan. AT&T was down 0.97 percent, T-Mobile dropped 1.6 percent and Sprint fell 2.6 percent.

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Hain Celestial dropped 11 percent after the packaged foods maker disclosed on Friday that the SEC issued a subpoena seeking certain documents.

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DuPont has agreed to pay $670.7-million in cash to settle several lawsuits related to a chemical leak from a plant in West Virginia that made Teflon. Chemours Co., which was spun off from DuPont, said it will pay half of the settlement. Both companies denied any wrongdoing.

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Goldman Sachs initiated coverage on Hasbro with a "buy" rating, pointing to its entertainment-backed lineup of toys like those based on Marvel films and on various Disney franchises.

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Morgan Stanley upgraded the shares of J.C. Penney to "equal-weight" from "underweight," saying the risk/reward profile now looks balanced. Its shares rose 2.8 per cent in premarket trading.

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Allergan Plc on Monday said it would buy Zeltiq Aesthetics Inc.  for about $2.48 billion to gain access to its flagship body contouring technology. Allergan's shares fell 0.11 per cent while Zeltiq's share soared 12.55 per cent in premarket trading.

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Regeneron Pharmaceuticals was upgraded to "overweight" from "neutral" at Piper Jaffray, which expects Food and Drug Administration approval for Regeneron's dermatitis drug Dupixent and autoimmune disease treatment Kevzara. Its shares rose 1.17 per cent in premarket trading.

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Earnings include: Arch Capital Group Ltd.; First Data Corp.; Gluskin Sheff + Associates Inc.; HCP Inc.; MTY Food Group Inc.; Noble Energy Inc.; Restaurant Brands International Inc.; TMX Group Ltd.

With files from wire services

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