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Before the Bell: Traders await Fed as Valeant tumbles

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.

Eastern North America has been partially shut down due to a major late winter ‎storm which has grounded thousands of flights. The meeting between U.S. president Donald Trump and German chancellor Angela Merkel in Washington has been postponed from today to Friday due to the weather. So far the two-day Fed meeting leading up to tomorrow's interest rate decision is still scheduled to proceed.

Stock markets around the world have been trading flat to slightly lower overnight. U.S. index futures, the Dax and the Nikkei are all down 0.1 per cent, while the FTSE is up 0.1 per cent. WTI crude oil is up 0.7 per cent in a trading bounce. Gold is trading flat while most major currencies are down slightly against U.S. dollar with one exception.

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The British Pound is tumbling today, losing a big figure to the U.S. dollar and smaller amounts to other majors, including the Euro. Today, the House of Commons ‎voted down the two amendments the House of Lords had proposed, paving the way for prime minister Theresa May to trigger Article 50 and start Brexit negotiations. Press reports have suggested this could happen by the end of this month but perhaps not this week. Other reports have centered around additional legislation which may be needed and indications that the Ms. May is likely to say "No" to a second Scottish Referendum until after Brexit is completed at least (and who knows what the EU will look like by then?)

Due to the weather, U.S. trading could be light today. We may, however see traders start to position ahead of the potentially big developments set for Wednesday and Thursday which include Fed, Bank of Japan and B‎ank of England meetings, the Netherlands election, the U.S. preliminary budget and end of the debt ceiling deal, more talk around the Obamacare replacement legislation and potentially more.

MARKET DATA:

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

Dow -0.09 per cent; S&P 500 -0.11 per cent; Nasdaq: -0.08 per cent; TSX 60 -0.17 per cent

Equities
Japan's Nikkei -0.12 per cent
Shanghai composite index +0.07 per cent
Hong Kong's Hang Seng -0.01 per cent 
Germany's DAX +0.05 per cent
London's FTSE +0.25 per cent
France's CAC 40 -0.15 per cent

Commodities
WTI crude oil (Nymex April) +0.68 per cent at $48.73 (U.S.) a barrel
Gold (Comex April) +0.06 per cent at $1,203.80 (U.S.) an ounce
Copper (Comex May) +0.06 per cent at $2.627 (U.S.) a pound

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Currencies
Canadian dollar +0.017 at 74.35 cents (U.S.)
U.S. dollar index +0.22 at 101.59

Bonds
Canada 10-year bond yield +0.04 at 1.86 per cent

KEY ECONOMIC RELEASES

(8:30 a.m. ET) Canada new motor vehicle sales for January. Estimate is an increase of 2.0 per cent year over year.
(8:30 a.m. ET) U.S. PPI Final Demand for February. The consensus projection is an increase of 0.1 per cent from January and 1.9 per cent year over year. Excluding food and energy, the consensus is increases of 0.2 per cent and 1.5 per cent.

Also: U.S. Federal Open Market Committee (FOMC) meeting begins

KEY STOCKS TO WATCH

Earnings include: Americas Silver Corp.; Cardinal Energy Ltd.; Delphi Energy Corp.; Epsilon Energy Ltd.; Helix Biopharma Corp.; Information Services Corp.; Melcor Developments Ltd.; Polaris Materials Corp.; Rocky Mountain Dealerships Inc.; Solium Capital Inc.; Surge Energy Inc.; Yangarra Resources Ltd.

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


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Billionaire investor William Ackman walked away from Valeant Pharmaceuticals International Inc. (VRX-T) on Monday with a loss of more than $3 billion as he sold his entire stake in the struggling drug company after trying to rescue it for some 18 months. The abrupt and unexpected move by the powerful activist investor sent Valeant shares tumbling almost 10 per cent in after-hours trading. They have lost 95 per cent of their value since mid-2015. For Mr. Ackman, it marked a dramatic climbdown from his vocal support of the company, but should help soothe his own investors who had begun to show signs of concern about mounting losses in his portfolio.

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U.S. electronics payments provider Euronet Worldwide Inc. (EEFT-Q) said on Tuesday it offered to buy money-transfer company MoneyGram International Inc for $15.20 per share, trumping Ant Financial's bid of $13.25 per share. MoneyGram said its offer for each MoneyGram common share and preferred stock, on an as-converted basis, valued the company at more than $1 billion, in addition to the assumption of about $940 million of MoneyGram's debt outstanding.

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Operating profit at Volkswagen's biggest car brand fell last year, showing the challenges still facing the world's largest automaker 18 months on from its emissions scandal. The German company said last month it made a record group operating profit in 2016, excluding one-off items, helped by a strong performance from its Porsche sports cars and a turnaround at its Scania trucks business. But, providing details on its individual brands on Tuesday, the company said underlying operating profit at its VW brand fell 10 percent to 1.9 billion euros ($2 billion), with the profit margin slipping to 1.8 per cent from 2 per cent in 2015.

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With files from wire services

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