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Before the Bell: Stock futures rise on strong U.S. payroll data

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.

It's another big day for economic news that could potentially move the markets. Overnight, the spotlight has been on crude oil which has seen both Brent and West Texas Intermediate gain 0.9 per cent and WTI put $50 (U.S.) farther into the rear view mirror. A 1.8-million-barrel (mmbbl) drawdown in U.S. American Petroleum Institute crude oil, a 2.5 mmbbl drop in gasoline inventories, and a 2 mmbbl drop in distillate inventories helped to reignite interest in energy commodities by indicating the big builds of recent months are over and the market is starting to come back into balance. The results were better than what is being expected from this morning's Department of Energy reports, so there is potential for a positive surprise on the numbers. A miss, on the other hand, could spark a reversal so there's potential for more action in energy markets today.

Stock markets around the world along with most currencies have been holding steady overnight. U.S. and Canadian index futures are up 0.2 per cent or less, the FTSE is up 0.3 per cent while the Dax is down 0.13 per cent and the Nikkei up 0.3 per cent. Service PMI reports from around the world have been mixed with U.S. numbers due mid-morning. France's CAC is up 0.26 per cent after last night's Presidential all-candidates debate with reports suggesting Jean-Luc Melanchon, left-leaning leader fo the Untamed France movement, turning in a strong performance while Marine Le Pen, president of the National Front, apparently less visible with other Euro-skeptics on the stage.

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Currency markets have been steady for the most part. A missile test by North Korea ahead of the upcoming U.S. President Donald Trump – China Xi Jinping summit hasn't sparked a move into defensive plays like gold or the yen which are steady today. The biggest move in currencies has been a strong bounce by the British pound which has climbed back toward $1.2500 against the U.S. dollar. A stronger than expected U.K. PMI report and suggestions U.K. Prime Minister Theresa May could be flexible on movement of people, an area that could be a sticking point in Brexit negotiations. The European Union Parliament passed a resolution on the Brexit process so the wheels are turning away while both sides continue to stake out positions.

U.S. private employers added 263,000 jobs in March, more than the number they hired in February and well above economists' expectations, a report by a payrolls processor showed on Wednesday. The Street had been looking for a big retrenchment back toward 190,000 from 298,000 last month for the ADP National Employment Report. That strong report helped push futures higher.

U.S. Federal Reserve Open Market Committee minutes are due in the afternoon but are likely to be a non-event considering the Street has had several weeks to react to the dot plot, statement and numerous comments from Fed officials since the meeting. The big question remains whether the Fed will slow rate hikes at some point and shift focus to shrinking its balance sheet. The surprise resignation of Richmond Fed President Jeffrey Lacker over leaked information hasn't impacted trading but does highlight an ongoing changing of the guard at the Fed likely to continue over the next year.

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

MARKET DATA:

Futures (as of about 8:45 a.m. ET)

Dow +0.23 per cent; S&P 500 +0.17 per cent; Nasdaq: +0.01 per cent; TSX 60 +0.15 per cent

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Equities
Japan's Nikkei +0.27 per cent
Shanghai composite index +1.48 per cent
Hong Kong's Hang Seng +0.57 per cent 
Germany's DAX -0.17 per cent
London's FTSE +0.29 per cent
France's CAC 40 +0.26 per cent

Commodities
WTI crude oil (Nymex May) +1.02 per cent at $51.55 (U.S.) a barrel
Gold (Comex June) -0.25 per cent at $1,255.30  (U.S.) an ounce
Copper (Comex May) +1.45 per cent at $2.65 (U.S.) a pound

Currencies
Canadian dollar +0.11 at 74.67 cents (U.S.)
U.S. dollar index +0.14 at 99.96

Bonds
Canada 10-year bond yield +0.06 at 1.57 per cent

KEY ECONOMIC RELEASES

Japan services and composite PMI
Euro area services and composite PMI

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(8:15 a.m. ET) U.S. ADP national employment report for March. Consensus is an increase of 189,000 jobs.

U.S. private employers added 263,000 jobs in March, more than the number they hired in February and well above economists' expectations, a report by a payrolls processor showed on Wednesday.  Economists surveyed by Reuters had forecast the ADP National Employment Report would show a gain of 187,000 jobs, with estimates ranging from 110,000 to 225,000.  Private payroll gains in the month earlier were revised down to 245,000 from the originally reported 298,000.

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(9:45 a.m. ET) U.S. Markit services and composite PMI for March.
(10 a.m. ET) U.S. non-manufacturing ISM for March. Consensus is 57.0, down from 57.6 in February.
(10:30 a.m. ET) EIA petroleum status report.
(2 p.m. ET) U.S. Fed minutes released from March 14-15 meeting.

KEY STOCKS TO WATCH

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

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Panera Bread jumped 13.7 per cent after JAB Holdings, which owns Caribou Coffee and Peet's Coffee & Tea, said it would buy the bakery chain in a deal valued at $7.5-billion.

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Hudson's Bay Co. suffered a loss of $152-million in its crucial fourth-quarter holiday season, as the department-store retailer took a $116-million writedown tied to its struggling Saks OFF 5th and Gilt.com discounters and moved to revamp operations.

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Walgreens Boots Alliance matched estimates with adjusted quarterly profit of $1.36 per share, but revenue was below forecasts. Its shares fell 0.7 per cent in premarket trading.

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Biotech company Amgen was downgraded to "hold" from "buy" at Jefferies. Its shares fell 0.95 per cent in premarket trading.

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Keefe Bruyette & Woods upgraded Citigroup and Wells Fargo to "outperform" from "market perform." Citigroup shares were up 1.1 per cent and Wells Fargo shares were flat in premarket trading.

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Monsanto Co. reported fiscal second-quarter net income of $1.37-billion or $3.09 a share. Earnings, adjusted for one-time gains and costs, came to $3.19 per share. The results exceeded Wall Street expectations of $2.76 per share. Its shares rose 2 per cent in premarket trading.

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Earnings include: Bed Bath & Beyond Inc.; Monsanto Co.; MTY Food Group Inc.; Walgreens Boots Alliance Inc.; Yum China Holdings Inc.

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With files from wire services

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