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.
Overseas stocks markets have sold off to start the new trading week, following through from Friday afternoon's drop in North America which started on the news that Democratic presidential candidate Hilary Clinton is back under investigation by the FBI.
The FTSE and Dax are down about 0.3 per cent while the Hang Seng fell slightly. U.S. index futures have stabilized and are trading up slightly waiting for the next shoe to drop.
There are a few economic figures due today, like Chicago PMI mid-morning, -- but who are we kidding -- for the next 10 days at least trading is likely to be driven by U.S. election speculation. The polls have narrowed a lot in recent days. ABC News Tracking had Hillary Clinton with a 12-point lead last Tuesday and by Sunday this had shrunk to 1 to 3 points.
I have been warning traders for some time that markets have been too complacent about a Clinton win opening up the risk of a Brexit level surprise. Recent polling suggests a much closer race than many think and increasing potential for a win by Republican candidate Donald Trump that could spark an abrupt change in market sentiment and a spike in volatility. In the coming days we could see significant swings in the makets so traders should be ready for moves in both directions depending on what happens. As we have seen, a lot can happen in a week both in the markets and in politics.
This week's economic developments including manufacturing and service PMI, ADP and nonfarm payrolls and the U.S. Federal Reserve decision on interest rates are all likely to be viewed through the lens of what they mean for the election.
As we saw with U.S. GDP last week, any news is likely to be seized upon and spun to their advantage by both parties as examples of why U.S. President Barack Obama's economic policies are working (Democrats) or a disaster demanding change (Republicans).
Individual stocks and sectors could also be active on corporate News. General Electric has agreed to take over driller Baker Hughes to create an oilfield services giant with over $32-billion in combined annual revenues. This deal could give a shot in the arm to the struggling oil patch and energy stocks stoking speculation about the potential for additional mergers. This deal suggests we've seen the bottom and that potential purchasers seem to be seeing value out there. Also keep an eye on the Dallas Fed survey for an update on the economic health of U.S. oil producing regions.
In Canada today, Suncor has agreed to sell Petro Canada's lubricants business to HollyFrontier for $1.1-billion.
Now, here is a closer look at what's going on this morning and what is still to come.
Futures (as of about 7:30 a.m. ET)
Dow +0.01 per cent; S&P 500 +0.02 per cent; Nasdaq: +0.23 per cent; TSX 60 +0.09 per cent
Japan's Nikkei -0.12 per cent
Shanghai composite index -0.09 per cent
Hong Kong's Hang Seng -0.09 per cent
Germany's DAX -0.35 per cent
London's FTSE -0.46 per cent
France's CAC 40 -0.79 per cent
WTI crude oil (Nymex Dec.) -0.51 per cent at $48.45 (U.S.) a barrel
Gold (Comex Dec.) -0.14 per cent at $1,275.00 (U.S.) an ounce
Copper (Comex Dec.) -0.11 per cent at $2.19 (U.S.) a pound
Canadian dollar -0.11 at 74.64 cents (U.S.)
U.S. dollar index +0.20 at 98.56
Canada 10-year bond yield -0.9483 at 1.21 per cent
KEY ECONOMIC RELEASES
Japan industrial production and retail trade; Bank of Japan monetary policy meeting
Euro Area real GDP, consumer price index
Germany retail sales
(8:30 a.m. ET) Canada industrial producer price index and raw materials price index for September. Estimates are a decline of 0.3 per cent and an increase of 0.5 per cent from August, respectively.
(8:30 a.m. ET) U.S. personal spending and personal income for September. The consensus projections are increases of 0.5 per cent and 0.4 per cent from August, respectively.
(8:30 a.m. ET) U.S. Core PCE Price Index for September. Consensus is an increase of 0.1 per cent from August and 1.7 per cent year over year.
(9:45 a.m. ET) U.S. Chicago PMI
(10:30 a.m. ET) U.S. Dallas Fed Manufacturing Survey.
KEY STOCKS TO WATCH
General Electric was up 0.34 percent at $29.32 in premarket trading after it said it would merge its oil and gas business with oilfield services provider Baker Hughes. Baker Hughes was up 10.7 percent at $65.45.
Level 3 Communications rose 3.9 percent to $56.15 after CenturyLink said it would buy the company in a deal valued at about $34 billion.
See also: Monday's small-cap stocks to watch
Earnings include: Affiliated Managers Group Inc.; Anadarko Petroleum Corp.; Dominion Resources Inc.; Enbridge Energy Partners LP; Loews Corp.; Louisiana-Pacific Corp.; Louisiana-Pacific Corp.; Lumber Liquidators Holdings Inc.; NextEra Energy Inc.; Parex Resources Inc.; Second Cup Ltd.; Southern Co.; Sprott Resource Corp.; Tesoro Corp.; Vermilion Energy Inc.
With files from wire services