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Premarket: Dow poised to hit multi-year highs as German court says ja

The Dow is poised to hit its highest levels since 2007 this morning after a German constitutional court said "ja" (albeit with some buts) to a €500-billion bailout fund proceeding in Europe. Canadian stocks should also see a lot of green this morning, finding additional support from higher commodity prices. The Dow closed at its highest levels in nearly five years on Tuesday at 13,323.

The ruling, though not unexpected, came as a relief to the markets, with the euro hitting a four-month high $1.29017 (U.S.)

As the Globe's Eric Reguly reports, there were some conditions attached to the approval, notably setting a cap on Germany's ESM liability. The judges ruled that the €190-billion in German financial guarantees already approved by the German parliament could only be increased by another parliamentary vote. In effect, this limits taxpayers' exposure to a fund that is gearing up for more sovereign rescues.

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The conditions are considered relatively benign.

On the data front overnight, there was some mildly positive news, with industrial production in the 17 countries sharing the euro rising 0.6 per cent in July from June. That's better than forecasts of economists polled by Reuters, who had expected no growth in the month.

Also overnight, China moved to prop up growth by saying it will pay export tax rebates faster and grant more loans to exporters, as well as increase export credit insurance to small companies.

Here in North America, the data cupboard is pretty empty, as the Federal Reserve begins a two-meeting meeting that will wrap up with its much-anticipated monetary policy statement Thursday. A majority of economists expect a third round of bond purchases and also expect the Fed to extend the duration of its zero-interest-rate policy into 2015, according to the latest Bloomberg survey.

The potential Fed action is no doubt at least already partly factored into markets now, so stocks are vulnerable to a nasty downturn if the Fed doesn't come through.

Here's the rundown of what else you need to know as the investing day gets underway.

MARKETS:

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Equities:
Futures: Dow +0.4 per cent, S&P 500 +0.6 per cent, Nasdaq +0.6 per cent

Hong Kong's Hang Seng index +1.09 per cent

Shanghai Shenzhen CSI 300 +0.3 per cent

Japan's Nikkei +1.73 per cent

London's FTSE 100 +0.10 per cent

France's CAC 40 +0.59 per cent

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Germany's DAX index +0.83 per cent

Commodities:
WTI (Nymex Oct) +0.85 per cent at $97.74 (U.S.) a barrel

Gold (Comex Dec) +0.63 per cent at $1,745.90 (U.S.) an ounce

Copper (Comex Dec) +0.53 per cent at $3.72 (U.S.) a pound

Currencies:
Canadian dollar down  0.0003, or 0.3 per cent, at 1.0269 (U.S.)

STOCKS AND ECONOMIC INDICATORS TO WATCH:

Chesapeake Energy said it is selling $6.9-billion in energy assets to repay debt. Shares are up 4 per cent in the pre-market.

Facebook stock is up 3 per cent in the pre-market after CEO Mark Zuckerberg told a tech conference late Tuesday that the company is poised to make a lot more money on mobile than it does on its core desktop-advertising business.

Dollarama has reported second-quarter earnings per share of 66 cents.

Texas Instrument shares may come under pressure today after the company in the post-market Tuesday narrowed its expected ranges for third-quarter earnings and revenue.

Apple is expected to unveil the new iPhone. Join our live blog starting at 1 p.m. (ET) for coverage of the launch presentation.

THIS MORNING'S TOP READS ON THE WEB:


10 expert takes on Facebook stock now that it's trading for less than half its IPO price

The S&P 500, already at multi-year highs, could easily take aim at 1500 before a significant retreat, some technical analysts say.

An oil forecasting tool that's acting up.

Why Zipcar is one of the cheapest stocks available and could even double or triple.

It's time to look seriously at Cisco as a dividend growth stock.

An interview with a contrarian investment manager who handily beat peers by buying newspapers and avoiding China

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About the Author
Investment Editor

Darcy Keith is The Globe and Mail's Investment Editor. He has been a business journalist since 1992 and joined the Report on Business in 2010 from Yahoo! Canada, where he was the senior editor of finance. More

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