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Before the Bell: TSX to slip despite strong energy results

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 relentless drive higher by stock markets has stopped for a rest overnight. U.S. index futures are trading down ‎0.1 per cent, the Dax is down 0.2 per cent while the FTSE is off 0.3 per cent and the Nikkei is down 0.5 per cent. Crude oil is steady while the U.S. dollar is down slightly against gold and major currencies.

There hasn't been much in the way of overnight economic news except for ‎a better-than-expected Australian jobs report. Therefore the pause appears to be mainly due to technical exhaustion. It is too early to tell if a top may be forming or if this is a rest stop within a bigger advance.

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One thing that could give U.S. traders pause ‎is increasing signs the Fed could raise rates at its March meeting. Following on from Federal Reserve Chair Janet Yellen's testimony, regional Fed Presidents have been talking hawkishly. Last night, New York Fed President William Dudley indicated he expects to see a small rate hike in the coming months if forecasts work out. Philadelphia Fed President Patrick Harker continues to look toward three hikes this year, the Fed's party line while Boston Fed President Eric Rosengren thinks we could see even more increases than that.

The U.S. Dollar Index is holding just shy of 101.00 indicating the Street expects four rate hikes this year with expectations for a March hike increasing.

It's a big day for earnings in Canada today. Results from EnCana, TransCanada and Cenovus in the energy sector have come in above expectations, indicating rising energy prices are paying off. ‎Canadian Tire beat the street on sales and earnings with Tire same store sales up a strong 8.1 per cent. Sun Life and Fortis also beat the Street by wide margins. Bombardier disappointed again posting an even deeper loss than the market had been expecting. Gold earnings were mixed with Barrick and Goldcorp beating the Street while Agnico-Eagle and Kinross fell short of expectations.

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

MARKET DATA:

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

Dow -0.16 per cent; S&P 500 -0.16 per cent; Nasdaq: -0.02 per cent; TSX 60 -0.16 per cent

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Equities
Japan's Nikkei -0.47 per cent
Shanghai composite index +0.51 per cent
Hong Kong's Hang Seng +0.47 per cent 
Germany's DAX -0.29 per cent
London's FTSE -0.33 per cent
France's CAC 40 -0.43 per cent

Commodities
WTI crude oil (Nymex March) +0.41 per cent at $53.82 (U.S.) a barrel
Gold (Comex April) +0.43 per cent at $1,238.40  (U.S.) an ounce
Copper (Comex March) -0.36 per cent at $2.75 (U.S.) a pound

Currencies
Canadian dollar +0.29 at 76.72 cents (U.S.)
U.S. dollar index -0.51 at 100.69

Bonds
Canada 10-year bond yield +0.13 at 1.76 per cent

KEY ECONOMIC RELEASES

ECB minutes from Jan. 19 meeting

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(8:30 a.m. ET) U.S. initial jobless claims for week of Feb. 11. Estimate is 245,000, an increase of 11,000 from week of Feb. 4.

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(8:30 a.m. ET) U.S. housing starts for January. Consensus is an annualized rate increase of 0.2 per cent.

Builders started work on more U.S. homes than forecast in January after an upward revision to starts in the prior month, a sign construction was on a steady path entering 2017. Residential starts totalled an annualized 1.25 million, easing from a 1.28 million pace in the prior month, a Commerce Department report showed Thursday. The median forecast of economists surveyed by Bloomberg was 1.23 million. Permits, a proxy for future construction, increased at the fastest pace since November 2015 on a pickup in applications for apartment building.

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(8:30 a.m. ET) U.S. building permits for January. Consensus is an annualized rate increase of 0.2 per cent.
(8:30 a.m. ET) U.S. Philadelphia Fed Index.

KEY STOCKS TO WATCH

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

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Canadian plane and train maker Bombardier Inc. reported lower-than-expected revenue, hurt by weak demand in its rail and business aircraft units. The company posted a loss of 7 cents per share excluding special items for the three-month period ending Dec. 31 after breaking even during the same quarter in 2015. Analysts had expected a loss of 3 cents, according to the average of estimates compiled by Bloomberg and Reuters.

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Canadian oil and gas producer Cenovus Energy Inc.  reported a surprise quarterly profit as production rose and costs fell. Its shares were up 5 per cent in premarket trading.

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Canadian oil and natural gas producer Encana Corp.  reported a quarterly operating profit that topped analysts' estimates and boosted its 2017 capital expenditure target by 50 percent from a year earlier. Its shares fell 0.5 per cent in premarket trading.

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TransCanada Corp., Canada's No. 2 pipeline operator, reported a better-than-expected quarterly profit, helped by strength in its U.S. and Mexican pipeline businesses. Excluding items, the company reported 75 cents per share, beating analysts' estimate of 72 cents, according to Thomson Reuters I/B/E/S. Its shares were up 1.3 per cent in premarket trading.

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Parka maker Canada Goose Holdings Inc. filed paperwork Wednesday for an expected $200-million (U.S.) initial public offering, the third debut in the past six months from a Canadian company that sells trendy consumer products.

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Cisco rose 1.46 percent to $33.30 premarket after the network equipment maker reported better-than-expected quarterly revenue and profit. ts shares were up 0.9 per cent in premarket trading.

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U.S. burger chain Wendy's Co. reported higher-than-expected quarterly sales at established restaurants as it attracted more diners with its value meals. However, net income fell to $28.9-million, or 11 cents per share, for the fourth quarter ended Jan. 1 from $85.9 million, or 31 cents per share, a year earlier. Revenue fell 33 percent to $309.9 million. Analysts on average had expected an adjusted profit of 9 cents per share and revenue of $308.5 million, according to Thomson Reuters I/B/E/S.

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Cosmetics maker Avon Products Inc. reported fourth-quarter revenue and profit that missed estimates as demand slipped in all but one of its markets. Net loss attributable to the company narrowed to $10.7 million, or 4 cents per share, in the quarter ended Dec. 31, from $333.4 million, or 76 cents, a year earlier.  Total revenue declined 2.4 percent to $1.57 billion. Analysts on average expected revenue of $1.61 billion, according to Thomson Reuters I/B/E/S. On an adjusted basis, Avon earned 1 cent per share versus analysts' average estimate of 9 cents.

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NetEase rose 5.6 percent to $276.55 following the Chinese online game developer's revenue beat.

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Molina Healthcare dropped 16.5 percent to $50 after the health insurer reported a fourth-quarter loss and forecast 2017 profit far below estimates.

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Valeant was up 2.6 percent at $17.30 after the FDA approved its drug to treat plaque psoriasis.

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Credit Suisse raised its target price on Barrick Gold Corp. to $25 from $23.

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CIBC raised its rating on Colliers International Group Inc. to "outperformer" from "neutral."

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CIBC cut its target price on First Capital Realty Inc. to $22 from $23.

Earnings include: Aimia Inc.; Ameren Corp.; Canam Group Inc.; Canadian Tire Corporation Ltd.; Cenovus Energy Inc.; CI Financial Corp.; Consolidated Edison Inc.;  DISH Network Corp.; Duke Energy Corp.; Echelon Financial Holdings Inc.; Encana Corp.; Equitable Group Inc.; Fairfax Financial Holdings Ltd.;  Finning International Inc.; First Quantum Minerals Ltd.; Fortis Inc.; Hyatt Hotels Corp.; Industrial Alliance Insurance and Financial Services Inc.; Inter Pipeline Ltd.; Lucara Diamond Corp.; Mandalay Resources Corp.; MGM Resorts International; PG&E Corp.; Pure Gold Mining Inc.; Sherritt International Corp.; Sienna Senior Living Inc.; Superior Plus Corp.; Supremex Inc.; Time Inc.; TransCanada Corp.; Tree Island Steel Ltd.; Waste Management Inc.; West Fraser Timber Co Ltd.; Western Forest Products Inc.; Winpak Ltd.; Yamana Gold Inc.; Zoetis Inc.

With files from wire services

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