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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.

Markets around the world continue to react to yesterday's news from the U.S. Federal Reserve. In addition to the widely expected 0.25 per cent rate hike, the central bank painted a positive picture of the U.S. economy of strong job growth, and strong economic growth. Fed Chair Janet Yellen indicated the U.S. doesn't need fiscal stimulus to reach the national employment target, clearly ignoring that some regions are doing a lot better than others.

The dot plot of Fed Funds forecasts has been front and centre once again with the forecasts looking toward three rate hikes for 2017, up from two in the September dot plot. This has ignited a major rally in the U.S. dollar which has gone screaming up 2 per cent or more against other currencies. Gold is down 2.8 per cent overnight while silver is down 5.4 per cent. The euro to U.S. dollar has broken down under 1.0500, the pound to U.S. dollar has been knocked back under $1.2500 while U.S. dollar to yen has soared from 115 toward 118 and U.S. dollar to Canadian dollar had rallied from near $1.3100 toward $1.3300.

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Between the U.S. dollar rally and U.S. treasury yields blasting through 2.50 per cent, the short-term outlook for U.S. corporate earnings has weakened considerably‎, impacting stock prices. Although U.S. index futures have stabilized overnight, U.S. indexes are still licking their wounds. The Dow, for example, was challenging 20,000 before the meeting and now is struggling to hold on to 19,800. The Hang Seng took a 1.7-per-cent hit overnight. The FTSE and Dax are trying to bounce back a bit rising 0.1 per cent and 0.6 per cent respectively.

There has been a ton of other news overnight. The Bank of England, Swiss National Bank, Norges Bank and the Bank of Korea all held monetary policy steady as expected. Flash PMI reports for December have been well above expectations a positive sign for Japan and Europe with the U.S. due later this morning.

Crude oil is one of the few markets that has been able to stand up to the strong dollar overnight shrugging off yesterday's initial post meeting losses. WTI was up in earlier trading but has slipped but Brent up 0.5 per cent. ‎Energy markets could be active again with natural gas storage due mid morning and temperatures plunging in consuming regions.

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

MARKET DATA:

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

Dow +0.02 per cent; S&P 500 -0.10 per cent; Nasdaq: -0.19 per cent; TSX 60 +0.12 per cent

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Equities
Japan's Nikkei +0.10 per cent
Shanghai composite index -0.71 per cent
Hong Kong's Hang Seng -1.77 per cent 
Germany's DAX +0.59 per cent
London's FTSE +0.15 per cent
France's CAC 40 +0.60 per cent

Commodities
WTI crude oil (Nymex Jan.) -0.02 per cent at $51.03 (U.S.) a barrel
Gold (Comex Feb.) -2.60 per cent at $1,133.50  (U.S.) an ounce
Copper (Comex March) -0.69 per cent at $2.59 (U.S.) a pound

Currencies
Canadian dollar -0.20 at 75.04 cents (U.S.)
U.S. dollar index +1.14 at 102.90

Bonds
Canada 10-year bond yield -0.22 at 1.81 per cent

KEY ECONOMIC RELEASES

Japan manufacturing PMI
Euro Area manufacturing, services and composite PMI

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(8:30 a.m. ET) Canada manufacturing sales and new orders for October. Estimates are increases of 0.6 per cent and 0.5 per cent from September, respectively.

Statistics Canada says manufacturing sales fell 0.8 per cent to $51.0 billion in October, including declines in the primary metal, petroleum and coal product, and machinery industries.Economists had expected a gain of 0.4 per cent for the month, according to Thomson Reuters.October's decline followed two consecutive monthly gains. Sales fell in 15 of the 21 industries tracked by Statistics Canada, representing 61 per cent of the manufacturing sector. Durable goods fell 1.1 per cent, while non-durable goods sales dropped 0.4 per cent. Constant dollar sales fell 1.7 per cent in October, reflecting a lower volume of manufactured goods sold.


(8:30 a.m. ET) U.S. initial jobless claims for week of Dec. 10. Estimate is 256,000, down 2,000 from previous week.

The Labor Department says that weekly claims for jobless benefits dropped by 4,000 last week to a seasonally adjusted 254,000, the lowest level in three weeks. The less-volatile four-week average rose by 5,250 to 257,750. Overall, 2.02 million Americans are collecting unemployment checks, down 10.1 per cent from a year ago. Claims have come in below 300,000 for 93 straight weeks, the longest such streak since 1970 when the population and labour force were much smaller. The applications are a proxy for layoffs and the low numbers suggest that the labour market remains healthy. Unemployment in November fell to a nine-year low of 4.6 per cent.


(8:30 a.m. ET) U.S. current account deficit for Q3. Consensus is $111-billion, down from $119.9-billion in Q2.

The U.S. current account deficit fell in the third quarter as a jump in soybean shipments boosted exports, government data showed on Thursday. The Commerce Department said the current account deficit, which measures the flow of goods, services and investments into and out of the country, fell to $113.0 billion from a downwardly revised $118.3 billion the second quarter. Economists polled by Reuters had forecast the current account deficit declining to $111.6 billion from a previously reported $119.9 billion shortfall.

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(8:30 a.m. ET) U.S. CPI for November. Consensus is an increase of 0.2 per cent from October and 1.7 per cent year over year. Excluding food and energy, the projections are increases of 0.2 per cent and 2.2 per cent, respectively.

Consumer prices rose in November by the smallest amount in three months as a jump in energy prices moderated a bit and food prices remained flat. The Labor Department says its consumer price index increased 0.2 per cent last month after a 0.4 per cent October increase.


(8:30 a.m. ET) U.S. Philadelphia Fed Index
(8:30 a.m. ET) U.S. Empire State Manufacturing Survey.
(9 a.m. ET) Canada existing home sales and average prices for November. Estimates are unchanged and up 6.0 per cent year over year, respectively.
(9 a.m. ET) Canada MLS Home Price Index for November. The estimate is an increase of 14.5 per cent year over year.
(10 a.m. ET) U.S. NAHB Housing Market Index for December. Consensus is unchanged from November.
(10:30 a.m. ET) Bank of Canada Financial Systems Review. Governor Stephen Poloz is scheduled to hold a press conference at 11:15 a.m.
(4 p.m. ET) U.S. net Treasury International Capital flows for October.

KEY STOCKS TO WATCH

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

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Bombardier Inc. says it expects to improve profit and grow revenue next year as it cranks up sales of rail equipment and C Series planes while the benefits of a deep cost-cutting effort take hold.  It expects to tally earnings before interest and taxes in the range of $530-million (U.S.) and $630-million next year before special items, a roughly 50 per cent improvement over 2016. The profit target will be driven mostly by restructuring initiatives launched by chief executive officer Alain Bellemare, who replaced Pierre Beaudoin in the job in February of last year.

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As the parent of grocer Sobeys Inc. posted another quarter of poor results, it said it has launched a broad review of the company's costs. Empire Co. Ltd. said Wednesday its second-quarter profit slumped by more than half to $33.1-million or 12 cents a share from $68.5-million or 25 cents a share a year earlier. Sales slipped to $5.9-billion from $6.1-billion. Adjusted profit tumbled even more – by more than 70 per cent – to $32.9-million or 12 cents a share from $110.7-million or 40 cents a share. Analysts were expecting 28 cents a share in the latest quarter, according to a poll by Thomson Reuters.

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Canadian Natural Resources is planning to complete the last major component of its Horizon oilsands expansion by the end of next year as part of a $3.9-billion capital spending program. It says the 2017 capital budget – which is marginally higher overall than this year's forecast spending – will allocate about $1.71-billion to Horizon, down from $2.74-billion forecast for this year. However, spending on exploration and production projects will rise by $465-million, to $1.79-billion, and spending on thermal oil sands projects apart from Horizon will rise by $195-million to $365-million.

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Rupert Murdoch's Twenty-First Century Fox said  it had agreed to buy European pay-TV firm Sky for $14.6-billion, sticking to its 10.75 pounds ($13.40 U.S.) per share offer despite complaints from some investors.

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Mondelez was up 4.7 percent at $44.85 in premarket trading after reports that Kraft Heinz may buy the Cadbury chocolate maker. Kraft was up 0.8 percent at $85.05.

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Yahoo fell 3.6 percent to $39.44 after the largest security breach in history. The company said data from more than 1 billion accounts was compromised in August 2013.

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Eli Lilly reaffirmed its 2016 and 2017 guidance, adding it has the potential to launch 20 new products by 2023. Shares of the pharmaceutical company rose 4 percent in premarket trading.

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Pier 1 stock spiked around 20 percent after reporting better-than-expected quarterly results and raising its full-year guidance.

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Manufacturing firm Apogee Enterprises posted earnings per share of 78 cents and sales of $274.1-million, beating earnings estimates of 77 cents per share and a sales forecast of $272.9 million. The company also raised its earnings outlook for 2017.

Analyst actions:

Instinet downgraded Marathon Oil to "neutral" from "buy," citing valuation concerns. However, Instinet also raised its price target on the stock to $19 from $15.

Valeant Pharmaceuticals' stock was downgraded to "equal weight" from "overweight" at Morgan Stanley. "Our thesis that Valeant's business would stabilize and asset sales would enhance value has not materialized. We move to the sidelines as we await future corporate updates. Lowering PT from $25 to $17," Morgan Stanley said.

Stifel resumed coverage of Archer Daniels Midland's stock with a "hold" rating and a $46 price target, citing improving margins within certain segments and cost savings, "offset in part by continued pressure on grain merchandising and transportation margins, as well as an oversupplied ethanol market."

Barclays initiated coverage of JetBlue and United Continental with an "overweight" rating, citing "material upside" within the stocks.

Piper Jaffray resumed coverage of animal health firm Zoetis with an "overweight" rating and a $61 price target.

RBC Capital Markets downgraded General Mills to "sector perform" from "outperform," and reduced its price target to $69 from $73 per share, citing declining volumes.

Merus Labs International Inc.: Canaccord Genuity cuts target price to $3 from $3.50

Vermilion Energy Inc.: RBC raises target price to $56 from $53

Earnings include: Adobe Systems Inc.; Oracle Corp.; Rite Aid Corp.; Transat At Inc.

With files from wire services

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