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Before the Bell: TSX set to open higher as oil gains

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.

Stock markets were stable overnight with the initial shock of U.S. President Donald Trump's health care reform bill failure fading. Quickly ending a debate that was going in circles to move on to tax reform and maybe infrastructure spending helped to soften the blow. This also sends a message to Congress they can't drag on debate forever and leaves the door open to back channel negotiations that could end up being more fruitful. That being said, progress is going to need to be made on something before traders lose patience with the political process.

U.S. index futures are mixed, the FTSE is up 0.1 per cent while the Dax is up 0.6 per cent and the Nikkei has gained 1.1 per cent in a bigger bounce. Currencies are holding steady with gold, the British pound, euro, and Japanese yen holding on to recent gains. West Texas Intermediate Crude is up 0.1 per cent essentially clawing back yesderday's loss.

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The U.S. Dollar Index remains below 100.00 having taken the brunt of the selling pressure from the health care failure. Traders have recognized that the failure means that other initiatives could get watered down or delayed. Because of this President Trump's fiscal efforts may not be as stimula‎tive or inflationary as previously thought, easing the pressure on the Fed to raise interest rates.

The inability of Congress to reach a deal also raises the risk of a big showdown later this year over the budget and debt ceiling. This could force the U.S. Federal Reserve to skip a quarterly hike, likely September. Last night Chicago Fed President Charles Evans indicated four hikes as unlikely based on how inflation is tracking and indicated he (speaking for the dovish faction at the Fed) favours two increases‎.

Today, a number of Fed members are out speaking today with the most important being Chair Janet Yellen, and Governor Jerome Powell, a permanent voter who doesn't speak publicly very often. They may shed more light on the Fed's monetary plans for this year.

Canada may also attract some attention from traders today with Bank of Canada Governor Stephen Poloz speaking. Earlier this year, Governor Poloz left the door open to an interest rate cut if Canada were to be impacted by U.S. trade policy changes.

Since then, however, Canadian job growth has been spectacular, meetings between Canadian officials and their U.S. counterparts have gone well and President Trump has made positive public statements about Canada. He approved Keystone XL pipeline last week ending eight years of delays and rejections under former president Barack Obama. Any change in tone from Governor Poloz could have a significant impact on trading in the Canadian dollar today.

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

MARKET DATA:

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Futures (as of about 9:00 a.m. ET)

Dow -0.13 per cent; S&P 500 -0.15 per cent; Nasdaq: -0.10 per cent; TSX 60 +0.07 per cent

Equities
Japan's Nikkei +1.14 per cent
Shanghai composite index -0.43 per cent
Hong Kong's Hang Seng +0.63 per cent 
Germany's DAX +0.51 per cent
London's FTSE +0.05 per cent
France's CAC 40 -0.07 per cent

Commodities
WTI crude oil (Nymex May) +1.03 per cent at $48.13 (U.S.) a barrel
Gold (Comex June) -0.80 per cent at $1,258.00  (U.S.) an ounce
Copper (Comex May) -0.09 per cent at $2.63 (U.S.) a pound

Currencies
Canadian dollar -0.12 at 74.59. cents (U.S.)
U.S. dollar index +0.14 at 99.96

Bonds
Canada 10-year bond yield +0.15 at 1.58 per cent

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KEY ECONOMIC RELEASES

(8:30 a.m. ET) U.S. goods trade deficit for February. The Street projects $66.5-billion, down from $68.8-billion in January.
(9 a.m. ET) S&P Case-Shiller Home Price Index (20 city) for January. Consensus projection is an increase of 0.7 per cent from December and 5.6-per-cent rise year over year.
(9:50 a.m. ET) Bank of Canada governor Stephen Poloz speaks in Oshawa to Durham College, UOIT and Trent University Oshawa. Press conference follows at 11:10 a.m.
(10 a.m. ET) U.S. Conference Board Consumer Confidence Index for March. Consensus is 113.6, down from 114.8 in February.
(12:50 p.m. ET) U.S. Fed chair Janet Yellen speaks at the National Community Reinvestment Coalition Annual Conference in Washington on "Addressing Workforce Development Challenges in Low-Income Communities"

Also: Quebec budget

KEY STOCKS TO WATCH

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

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Mortgage lender Home Capital Group Inc. said late Monday that it had terminated the employment of its CEO and appointed a temporary replacement. Martin Reid, who had been with Home Capital for a decade, will leave immediately and no longer serve on any of boards of directors of the firm or its subsidiaries. The move comes amid a continuing review of Home Capital and its executives by the Ontario Securities Commission. The regulator said earlier this month that it had served enforcement notices to past and current company management related to the disclosure of an investigation into fraudulent mortgage documents. Stepping in as interim CEO and president is Bonita Then, who has been a company director since 2008 and has served on the audit committee and the risk and capital committee.

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Valeant Pharmaceuticals International Inc.'s former chief executive officer accused the drug maker of failing to deliver 3 million shares promised him as part of an exit package. Ex-CEO Michael Pearson stepped down in May after Valeant's shares plummeted and it became the subject of U.S. Justice Department and congressional investigations. Valeant's shares on the NYSE were off 0.19 per cent in premarket trading.

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Barrick Gold Corp. and Goldcorp Inc., the world's No. 1 and No. 3 gold miners by value, have agreed to team up to potentially develop gold projects in northern Chile, Goldcorp said on Tuesday, as the industry starts to put money into growth again. In a move aimed at reducing development costs and risks, Goldcorp and Barrick will form a 50-50 joint venture to study building gold mines in Chile's Maricunga belt, Goldcorp said. That includes the Cerro Casale project, which is one of the world's biggest undeveloped gold deposits. Goldcorp's shares on the NYSE fell 1.62 per cent in premarket trading.

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Shares of Ford rose 0.61 per cent  in premarket trading after Trump tweeted that the U.S. automaker would make a major announcement regarding three plants in Michigan.

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Red Hat was up 4.8 per cent in light premarket trading after the Linux operating system distributor reported quarterly revenue that beat analysts' expectations.

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Amazon.com has agreed to buy Middle East online retailer Souq.com, thwarting a last-minute bid by Dubai billionaire Mohamed Alabbar's Emaar Malls. Amazon's shares were up 0.14 per cent in premarket trading.

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Spice maker McCormick reported adjusted quarterly profit of 76 cents per share, two cents a share above estimates. Revenue was slightly short of forecasts.

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Tesla Inc. said on Monday that Chinese tech giant Tencent Holdings Ltd. has invested $1.78-billion in the electric carmaker for a 5 per cent passive stake. Tesla's shares on the Nasdaq gained 2.06 per cent in premarket trading.

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Olive Garden owner Darden Restaurants Inc. said late Monday it would buy Cheddar's Scratch Kitchen for $780-million (U.S.) in an all-cash transaction. Darden said it would buy the restaurant chain from its shareholders including private equity firms L Catterton and Oak Investment Partners. On Tuesday, the company reported quarterly earnings of $1.32 per share, five cents a share above estimates. Darden's shares gained 4.19 per cent in premarket trading.

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China Southern Airlines Co Ltd. said on Tuesday it will sell a small stake to American Airlines Group Inc. in a $200 million deal that will give the carriers better access to the world's two largest travel markets.

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Earnings include: Alexco Resource Corp.; Carnival Corp.; Diversified Royalty Corp.; IHS Markit Ltd.; MAG Silver Corp.; McCormick & Company Inc.; Park Lawn Corp.; ProMetic Life Sciences Inc.; UrtheCast Corp.

With files from wire services

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