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Before the Bell: Futures sink ahead of Trump's Congress speech

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 remain stuck in a holding pattern. Traders still appear to be acting like deer caught in the headlights. The oncoming truck is U.S. President Donald Trump's speech to Congress at 9 p.m. EST,which could have a major impact on the direction of trading into March.

In recent weeks, the President has made a number of pronouncements of big things coming related to tax reform, health care and infrastructure spending. Traders have driven U.S. indexes to all-time records on anticipation of big announcements and are now looking to tonight's speech for more details. The speed of government is a lot slower than the speed of the markets and traders now need an indication of what is planned and when. With U.S. indexes technically overextended and exhausted, they appear vulnerable to a significant correction if traders lose patience or interest. The bar of expectations has been set very high for President Trump to deliver.

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It's the last day of the month so we could see some repositioning as well but so far trading across markets has been steady. U.S. index futures, the Dax and the Nikkei are all flat. The U.S. dollar is slightly stronger relative to other currencies with gold down 0.6 per cent. The yen has been the top performing currency overnight rallying ‎on pickups in Japanese housing starts and retail sales.

Today in North America, there are a number ‎of reports for traders to consider. The fourth quarter GDP update will only be important if there's a surprise. The most important part of that is the Core personal consumption expenditures index inflation number. The Street is expecting 1.3 per cent. Any increase toward the Fed's 2.0 per cent long-term goal could increase pressure on the U.S. Federal Reserve to raise interest rates in March. Chicago manufacturing PMI could also get some attention heading into tomorrow's national reports.

In Canada, ‎the focus is on bank earnings. The big banks had soared in the last month and we've been seeing profit-taking against strong reports from CIBC and RBC last week. Today, the Bank of Nova Scotia met expectations but raised its dividend while the Bank of Montreal beat the Street. Valeant Pharmaceuticals could be active today after beating the Street on both sales and earnings.

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

MARKET DATA:

Futures (as of about 8:30 a.m. ET)

Dow -0.05 per cent; S&P 500 -0.11 per cent; Nasdaq: -0.01 per cent; TSX 60 -0.21 per cent

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Equities
Japan's Nikkei +0.06 per cent
Shanghai composite index +0.43 per cent
Hong Kong's Hang Seng -0.77 per cent 
Germany's DAX -0.19 per cent
London's FTSE 0.00 per cent
France's CAC 40 -0.03 per cent

Commodities
WTI crude oil (Nymex April) -0.20 per cent at $53.94. (U.S.) a barrel
Gold (Comex April) -0.33 per cent at $1,254.60  (U.S.) an ounce
Copper (Comex May) -0.22 per cent at $2.69 (U.S.) a pound

Currencies
Canadian dollar +0.07 at 75.91 cents (U.S.)
U.S. dollar index +0.00 at 100.95

Bonds
Canada 10-year bond yield +0.10 at 1.63 per cent

KEY ECONOMIC RELEASES

Japan industrial production and retail sales
Euro Area consumer price index (CPI)
U.K. GfK consumer confidence and nationwide house prices

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(8:30 a.m. ET) Canada industrial product price index and raw materials price index for January. Estimates are declines of 0.1 per cent and 0.3 per cent, respectively.
(8:30 a.m. ET) U.S. real GDP and GDP deflator for Q4 (preliminary). Consensus is annualized rate increase of 1.9 per cent and 2.1 per cent, respectively.
(8:30 a.m. ET) U.S. goods trade deficit for January (actual). Estimate is $66-billion, up from $64.4-billion in December.
(8:30 a.m. ET) U.S. wholesale and retail inventories for January.
(9 a.m. ET) U.S. S&P Case-Shiller Home Price Index (20 city) for December. The consensus is an increase of 0.7 per cent from November and 5.4 per cent year over year.
(9:45 a.m. ET) U.S. Chicago PMI for February. Consensus is 53.0, up from 50.3 in January.
(10 a.m. ET) U.S. Conference Board Consumer Confidence Index for February. Consensus is 111.0, down from 111.8 in January.

Also: Canada capital expenditures survey (2015-17)

KEY STOCKS TO WATCH

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

**

Bank of Nova Scotia, Canada's third-biggest lender, reported improved first-quarter earnings that were just ahead of expectations. Scotiabank said net income in the first quarter to Jan.31 was $2-billion compared with $1.8-billion the year before. Earnings per share rose to $1.58 from $1.44 the year before. Analysts had on average forecast earnings of $1.57, according to Thomson Reuters I/B/E/S data. It boosted its dividend by 2 cents to 76 cents. Its shares in New York rose 0.11 per cent in premarket trading.

**

Bank of Montreal, Canada's fourth-biggest lender, on Tuesday reported much higher-than-expected quarterly earnings and announced plans to buy back 15 million of its shares. Net income for the first quarter ended on Jan. 31 rose to $1.49-billion, or $2.22 per share, from $1.07-billion, or $1.58 per share, a year earlier. Excluding one-off items, earnings were $2.28 per share. Analysts had on average expected $1.88, according to Thomson Reuters I/B/E/S.

**

The head of Canada's federal watchdog for financial transactions is promising a review of his agency's penalty policies after Manulife Financial Corp. disclosed that its banking subsidiary was disciplined for "administrative lapses." The Financial Transactions and Reports Analysis Centre of Canada, or FinTRAC, promised the review on Monday, the same day Manulife revealed it was penalized. FinTRAC had faced criticism since last year for withholding the identity of the lone Canadian bank that has paid for failure to disclose suspicious transactions.

**

Target plunged 12.74 percent to $58.60 in premarket trading after the big-box retailer warned sales could continue to decline this year.

**

Valeant rose 4.4 percent to $17.45 following quarterly revenue and profit that beat analysts' average estimates.

**

Perrigo dropped 12.2 percent to $74.35 after the drugmaker said it would delay filing its annual report.

**

Autozone earned $8.08 per share for its latest quarter, missing estimates by 11 cents a share. Its shares fell 1.64 per cent in premarket trading.

**

Priceline reported adjusted quarterly profit of $14.21 per share, beating consensus estimates of $13.01 a share. Its shares jumped 4.32 per cent in premarket trading.

**

Nutrisystem reported fourth-quarter results that topped Street estimates, and also gave upbeat guidance. Its shares jumped 20.4 per cent in premarket trading.

**

Car rental firm Hertz Global lost an adjusted 71 cents per share for the fourth quarter, wider than the 57 cent a share consensus estimate. Its shares rose 1.5 per cent in premarket trading.

**

Earnings include: AutoZone Inc.; Avigilon Corp.; Bank of Montreal; Bank of Nova Scotia; Cathedral Energy Services Ltd.; CenterPoint Energy Inc.; DREAM Unlimited Corp.;  E L Financial Corporation Ltd.; Extendicare Inc.; First National Financial Corp.; GDI Integrated Facility Services Inc.; Kinaxis Inc.; Laurentian Bank of Canada.; Painted Pony Petroleum Ltd.; Palo Alto Networks Inc.; Pengrowth Energy Corp.; Points International Ltd.; Sempra Energy; Sleep Country Canada Holdings Inc.; Tecsys Inc.; Timbercreek Financial Corp.; Valeant Pharmaceuticals International Inc.; Veresen Inc.; VersaBank.

With files from wire services

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