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Before the Bell: TSX to open lower as resource prices retreat

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.

World stock markets were mixed overnight but are ‎holding steady this morning between Brexit developments. The resource-weighted Australian market was the top performing, gaining 0.4 per cent while the Nikkei fell 0.8 per cent. European indexes and U.S. index futures are pretty much flat to slightly lower Thursday morning.

In currency markets, the British pound and euro remain in the spotlight between Wednesday's official triggering of Article 50 by Britain to start the Brexit process ‎and the first official response from the European Union expected Friday. Germany put out a report suggesting the the United Kingdom would be worse off than the EU after Brexit, but seriously what else are they going to say? That is the kind of report where people write the conclusion first and then work backwards.

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Sterling is outperforming the euro for a second straight day, indicating traders think Brexit will be better for the U.K. British ‎Prime Minister Theresa May including security issues in her plans reminds traders that the U.K. has its own areas of leverage in negotiations. Meanwhile, a poll showing 62 per cent of Scots support the U.K. government's positions on trade and immigration weakens the case for another independence vote.

Resources have dropped back a bit overnight in what looks like a normal trading correction with copper down 0.5 per cent and crude oil down 0.3 per cent. Gold is also down slightly. Based on this, we could see some softness in mining and energy stocks Thursday. Natural gas could be active around the mid-morning weekly storage report.

Thursday also brings U.S. gross domestic product, which probably won't have an impact unless there is a big surprise. Similarly, with so many Fed speakers this week, Thursday's group may not spark a significant reaction unless someone seriously deviates from the party line. German consumer prices and Canada producer prices may attract some attention as they could show whether inflation pressures on central banks are growing or shrinking.

In Canada, Dollarama could be active after the retailer handily beat the street on both sales ($854-million versus Street expectations of $842-million) and earnings ($1.24 per share versus Street expectations of $1.12), raised its dividend by 10 per cent, raised its long-term store growth target to 1,700 from 1,400 and indicated plans to start accepting credit cards.

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

MARKET DATA:

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

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Dow -0.15 per cent; S&P 500 -0.15 per cent; Nasdaq: -0.11 per cent; TSX 60 -0.18 per cent

Equities
Japan's Nikkei -0.80 per cent
Shanghai composite index -1.00 per cent
Hong Kong's Hang Seng -0.37 per cent 
Germany's DAX +0.01 per cent
London's FTSE -0.29 per cent
France's CAC 40 -0.12 per cent

Commodities
WTI crude oil (Nymex May) -0.26 per cent at $49.38 (U.S.) a barrel
Gold (Comex June) -0.29 per cent at $1,253.20  (U.S.) an ounce
Copper (Comex May) -0.50 per cent at $2.66 (U.S.) a pound

Currencies
Canadian dollar -0.07 at 74.95 cents (U.S.)
U.S. dollar index +0.14 at 99.96

Bonds
Canada 10-year bond yield +0.11 at 1.57 per cent

KEY ECONOMIC RELEASES

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Euro Area economic and consumer confidence
Germany consumer price index (CPI)

(8:30 a.m. ET) Canada industrial product price index and raw materials price index for February. The analyst estimates are increases of 0.5 per cent and 0.8 per cent, respectively, from January.
(8:30 a.m. ET) U.S. jobless claims for week of March 25. Estimate is 245,000, a decline of 16,000 from previous week.
(8:30 a.m. ET) U.S. real GDP and GDP deflator for Q4. Consensus is annualized rate increases of 2.0 per cent for both.

KEY STOCKS TO WATCH

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

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Cenovus announced late Wednesday that it was snapping up ConocoPhillips assets for $17.7-billion. Cenovus New-York listed shares were down 9 per cent in premarket trading. ConocoPhillips' shares were up 7.4 per cent.

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The federal and Ontario governments will provide about $150-million to Ford Motor Co. to backstop a $700-million investment the auto maker is making at its Canadian operations, sources familiar with the company's plans say. Ford shares were down 0.34 per cent in premarket trading.

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Dollarama handily beat earnings estimates, posting earnings of $1.24 a share versus expectations of $1.11 per share, boosted its dividend to 11 cents from 10 cents, and increased its long-term store target by 300 stores.

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Lululemon Athletica Inc.'s shares tumbled 19 per cent in premarket trading after the yoga wear retailer warned of a sluggish first quarter amid stiffening competition in the so-called athleisure fashion sector.

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Earnings include: China Gold International Resources Corp Ltd.; Dollarama Inc.; Erdene Resource Development Corp.

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With files from wire services

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