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Before the Bell: Five things every Canadian investor needs to know

Equity Markets

The Toronto stock market looked set for a positive open even as oil prices eased and with U.S. market closed for the Thanksgiving holiday. Canadian investors were also awaiting the latest reading on retail sales.

One stock that could see some action is Vancouver-based coal miner SouthGobi Resources Ltd. after it said on Thursday it sacked its chief executive officer, who is a suspect in a fraudulent loan case, with immediate effect, because of his inability to fulfill his daily duties.

In trading overseas, the U.S. dollar suffered its worst performance in five months, and the biggest slump in Chinese stocks in nearly two years too the shine off another record high in the global bull run.

The near 3 per cent drop in China came as its recent bond markets worries bled into equities and added to Europe's subdued mood as its main stock indexes opened in the red for the 10th day in the last 13.

The pan-European STOXX 600 slid 0.3 percent with Britain's FTSE 100 sinking 0.5 percent.

On emerging stock markets, which have hit six-year highs recently, there were some reversals, led mainly by Asia, where Hong Kong shares fell one percent from decade-highs, as a sudden selloff in mainland China fed through.

MSCI's emerging equity index fell 0.25 percent

Chinese onshore markets were hit by worries about a bond market selloff triggered by authorities' efforts to reduce financial sector risks.

The yield on Chinese 10-year Treasury bonds touched a three-year high of 4.03 percent, having risen almost 40 basis points since the end of September while corporate bond yields also rose.

Britain's FTSE was off 0.13 per cent, Germany's DAX fell 0.17 per cent but France's CAC gained 0.6 per cent.

In Asia, Japan's markets were closed for a holiday while the Shanghai index sank 2.3 per cent and the Hang Seng fell 1 per cent.

Commodities

U.S. oil prices eased back from a two-year high on Thursday, as concerns about oversupply outweighed the impact of a pipeline shutdown in the United States.

U.S. light crude was trading down 17 cents at $57.85 a barrel, slipping from its highest level since mid-2015 reached on Wednesday of $58.15.

Brent crude was at $62.98 per barrel, or 34 cents below its last close.

U.S. crude had been boosted by the shutdown of the 590,000 barrel-per-day (bpd) Keystone pipeline, which runs from Canada to the United States. Last week's closure due to an oil spill sent crude prices to their highest since June 2015.

But rising production in the United States has renewed concerns about global oversupply. U.S. output has risen by 15 percent since mid-2016 to a record 9.66 million bpd.

The United States, previously the world's biggest importer of crude oil, is now one of its biggest exporters, behind Russia and Saudi Arabia.

"The U.S. will, without question of doubt, be the biggest oil producer in the world in the next five years. They are producing... at half the cost than they were just two years ago," said Matt Stanley, fuel broker at Freight Investor Services in Dubai.

Gold steadied on Thursday, having risen nearly 1 percent in the previous session, as the dollar sank after minutes from the U.S. Federal Reserve's latest policy meeting dampened the outlook for interest rate hikes next year.

The dollar nursed losses after posting its biggest drop in five months on Wednesday after the Fed minutes showed "many participants" were concerned inflation would stay below the bank's 2 percent target for longer than expected.

"Gold is obviously still in need of a spark but we still see a chance of it reaching our year end target of $1,325," said Ole Hansen, head of commodity strategy at Saxo Bank.

"The outlook for inflation is still low, long yields will remain subdued and then we have geopolitical risks rising this year. That's enough to prompt investors to buy gold, even though the growth outlook is still strong across the world."

Spot gold was flat at $1,292.14 per ounce by 1115 GMT.

U.S. gold futures for December delivery were flat at $1,292.

Currencies and bonds

The Canadian dollar was up marginally close to the 79 cent mark even as oil prices slipped. It gained as the U.S. dollar nursed losses on Thursday after posting its biggest loss in five months in the previous session as investors dialed down expectations on the outlook for U.S. interest rate hikes next year based on minutes from the Federal Reserve's latest policy meeting.

With Chinese stocks down between 2-3 percent in Asian trade, low yielding currencies such as the Japanese yen and the Swiss Franc remain firmly supported against the greenback as investors shied away from taking positions in a holiday-shortened week.

"While a December U.S. rate hike seems to be baked in the cake, markets are getting concerned about a possible downgrade in expectations in the outlook for rate hikes next year after the latest minutes which is weighing on the dollar," said Kit Juckes, a macro strategist at Societe Generale in London.

The minutes, however, also highlighted concern among some of the members over the inflation outlook, with the emphasis placed on economic data in determining the timing of future rate rises.

The dollar edged 0.1 percent lower against a broad trade-weighted basket of currencies on Thursday to 93.15 after falling 0.8 percent in the previous session, its biggest daily percentage fall since June.

Bonds had celebrated a comeback on the speculation the Fed might not tighten U.S. policy as aggressively as previously thought.

While a move in December to between 1.25 and 1.5 percent is still almost fully priced in, Fed fund futures rallied to show rates at just 1.75 percent by the end of next year.

Borrowing costs in the euro area also crept up with minutes from the European Central Bank's October meeting, at which monthly asset purchases were extended well into 2018 albeit at a reduced pace, due later alongside a number of ECB speakers.

"The most important information to come from the accounts will be the degree of support there was for keeping QE open- ended by saying that it can be done beyond September," said Peter Chatwell, head of euro rates strategy at Mizuho.

U.S. bond trading was closed with the Thanksgiving holiday. Canada 10-year bonds were off slightly at 1.9 per cent.

Stocks set to see action

BGL Group, owner of Comparethemarket.com, said on Thursday it would sell a 30 per cent stake for about 675 million pounds ($1.14-billion) to the Canada Pension Plan Investment Board instead of listing its shares in London. BHL, the owner of BGL Group, will retain a majority shareholding in the business and the deal is expected to be completed by the end of April, it said.

Vancouver-based coal miner SouthGobi Resources Ltd. said it sacked its chief executive officer, who is a suspect in a fraudulent loan case, with immediate effect, because of his inability to fulfill his daily duties.

Hudson's Bay Co. says it has spent more than $540,000 to date to comply with demands for documents from Canada's competition watchdog as it investigates alleged deceptive pricing practices. The bureau claims that HBC offered mattresses and foundations sold together at grossly inflated regular prices so that it could then claim deep discounts on the sleep sets to suggest significant deals for customers.

More reading: Thursday's small-cap stocks to watch
More reading: Thursday's Insider Report: Companies insiders are buying and selling

Economic News

(8:30 a.m. ET) Canadian retail sales for September are announced. Estimate is a rise of 0.9 per cent from August.

With files from Reuters and Bloomberg

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