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Inside the Market Before the Bell: What every Canadian investor needs to know today

Equities

North American markets looked set for another volatile day Thursday with Wall Street futures pointing to a lower start after the previous session’s dramatic rebound. Dow futures were down by triple digits. S&P and Nasdaq futures were also weaker. On Bay Street, the markets reopen after a two-day break with futures pointing to a firmer start.

On Wednesday, the Dow recorded its biggest single-day jump on record, climbing nearly 5 per cent or more than 1,000 points. The S&P 500 gained 4.96 per cent and the Nasdaq recorded its best day since 2009, climbing 5.84 per cent.

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On Thursday, world stocks initially got a lift from Wall Street’s gains, although a decline in China’s industrial profits and renewed concerns about Italy’s banking sectors eventually took a toll. In morning trading, major European markets were mixed. Asian markets also went in opposite directions with Japan’s Nikkei closing up nearly 4 per cent but the Shanghai Composite Index sliding 0.61 per cent. Chinese markets were hit by a report showing China’s industrial profit fell in November for the first time in three years.

“Don’t get too comfortable as discussions regarding the various [U.S.] political and policy questions remain hanging in the balance,” OANDA analyst Stephen Innes said in a note. “Expect those conversations to continue Thursday amid a particularly light economic calendar.”

U.S. markets have had a rocky close to the year with a partial shutdown of the U.S. government adding to already volatile sentiment. Concerns over trade between the U.S. and China have also weighed, although news that a U.S. government delegation will head to Beijing early in January helped assuage some of those fears.

On Bay Street, markets are back in business after the two-day Christmas-Boxing Day break, although expect volumes to be light. Crude prices will like add pressure to energy shares. Both Brent and West Texas Intermediate were lower heading toward the North American open after surging a day earlier. Both were down about 1.5 per cent around 6:30 a.m. (ET) clawing back some of the losses seen earlier in the morning. Crude prices spiked 8 per cent on Wednesday but worries over a slowing global economy and market oversupply continue to see prices near their lowest levels in 18 months.

On Wall Street, retail shares could be in the spotlight after a report by credit-card giant Mastercard Inc. showed that U.S. holiday sales rose 5.1 per cent this year. That’s the best showing in six years, according to the report.

Overseas, the pan-European STOXX 600 was down 0.86 per cent. Renewed concerns over Italy’s banking sector emerged this week after Banca Carige was denied a cash call by its largest shareholder. Britain’s FTSE 100 was down 0.85 per cent. Germany’s DAX fell 1.67 per cent. France’s CAC 40 saw a modest gain of 0.1 per cent in morning trading.

In Asia, Hong Kong’s Hang Seng fell 0.67 per cent.

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Commodities

Crude prices lost some of the previous sessions sharp gains concerns over market oversupply and a slowing global economy continue to take a toll. Both Brent and West Texas Intermediate were lower ahead of the North American open. Brent has a day range so far of US$52.80 to US$54.67. The range on WTI is US$44.92 to US$46.70. Crude prices surged 8 per cent on Wednesday, climbing alongside U.S. markets.

Despite the previous session’s gains, crude prices are heading to a fall of more than 20 per cent for the year, even as OPEC and its allies ready production caps set to go into place next month. In January, OPEC and other producers including Russia will cut production by 1.2 million barrels a day.

Mr. Innes noted that Wednesday’s jump offered “a clear signal that the oil market tumult was rooted in the equity market volatility where investor sentiment has been weighted down by the unfortunate events in Washington, higher U.S. Interest rates, China economic slowdown and the omnipresent US-China trade dispute.”

On Thursday, markets will get the first weekly glimpse of U.S. crude inventories with the afternoon release of the American Petroleum Institute’s report on oil stocks. The numbers are released at 4:30 p.m. (ET). The U.S. Energy Information Administration releases its weekly report on Friday morning.

In other commodities, gold prices held near six month highs, supported by a weaker U.S. dollar and volatile equity markets. Spot gold rose 0.5 per cent at US$1,272.56 per ounce by midmorning in Europe. Gold prices touched their best levels since June on Wednesday. U.S. gold futures rose 0.2 per cent to US$1,275.10 per ounce.

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Currencies and bonds

The Canadian dollar was weaker, trading at the mid-73-US-cent mark early Thursday as crude prices pulled back. The day range on the loonie so far is 73.35 US cents to 73.71 US cents. There are no major Canadian economic releases on the docket for the rest of the week to offer direction for the currency.

Meanwhile, other commodities-linked currencies also struggled overnight. The Australian dollar was down 0.26 per cent at 70.51 US cents. The Norwegian crown and the New Zealand dollar were also down a quarter of a per cent each, according to Reuters.

The U.S. dollar was also weaker against a basket of world currencies, sliding 0.2 per cent to 96.82. The U.S. dollar index rose 0.5 per cent on Wednesday.

In bonds, U.S. Treasury yields were lower after Wednesday’s rally on Wall Street. The yield on the 10-year note was down at 2.768 per cent. The yield on the 30-year note was also lower at 3.028 per cent.

Stocks set to see action

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The Globe’s Andrew Willis reports Thursday that Hydro One Ltd. is going into the new year determined to complete the $4.4-billion takeover of U.S. utility Avista Corp., even after Washington state regulators turned down the deal earlier this month.

Exxon Mobil Corp. says its oil drilling and development activities offshore Guyana were unaffected by a weekend incident in which Venezuela’s navy stopped two exploration vessels the company had hired.

Apple Inc will begin assembling its top-end iPhones in India through the local unit of Foxconn as early as 2019, the first time the Taiwanese contract manufacturer will have made the product in the country, Reuters reports, citing an unnamed source. The work will take place at Foxconn’s plant in Sriperumbudur town in the southern state of Tamil Nadu, the report said.

France’s Vinci is paying about US$3.7-billion for a majority stake in Gatwick, adding the second busiest airport in Britain to its portfolio despite the shadow of Brexit. Expected to close by June next year, the deal to acquire a 50.01 per cent stake would make Gatwick the single largest asset in Vinci’s airport network, which would grow to 46 airports spanning 12 countries, the French company said on Thursday.

Economic news

U.S. claims for initial unemployment fell by 1,000 to 216,000 last week.

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With Reuters and The Canadian Press

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