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Premarket: Ugly Chinese trade figures halt market advance

U.S. stock futures are a little softer this morning, although commodities are gaining some ground thanks to weakness in the U.S dollar.

China's economic growth slowdown, and the likely curtailment in the near future of the Federal Reserve's $85-billion (U.S.) bond-buying program, are dominating the market's attention again this morning, threatening to put an end to the S&P 500's recent resurgence. The benchmark U.S. index came within 1 per cent of its record closing high on Tuesday.

In a particularly ugly economic reading released overnight, Chinese exports fell 3.1 per cent in June - a far cry from the 4-per-cent rise that had been forecast. It was the weakest reading since 2009.

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China is releasing second-quarter growth numbers on Monday that are expected to show a slowdown to 7.5 per cent. The export numbers suggest there could be some downside risks to the report next week and to the outlook for the rest of the year.

Nevertheless, Asian stocks rose overnight on speculation that the Chinese government will introduce measures to stimulate the economy. The exception was Japan, with the Nikkei pulling back a bit as the Japanese yen rose 1 per cent.

A big focus later today for traders across the globe will be the 2 p.m. (ET) release of minutes from the Federal Open Market Committee's June 18-19 meeting, and a later speech from Fed Chairman Ben Bernanke. His speech is on the Fed's first 100 years, and there will be questions and answers to follow that could shed more light on the Fed's bond tapering plans. The minutes may also indicate how many Fed members are in favour of reducing stimulus measures as early as this fall.

Now, here's a closer look at what's going on this morning and what's to come.

MARKETS:

Equities:

Futures: S&P 500 -0.15 per cent; Dow -0.06 per cent; Nasdaq -0.11 per cent; TSX Toronto +0.09 per cent

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Hong Kong's Hang Seng +1.0 per cent

Shanghai composite index +2.1 per cent

Japan's Nikkei -0.3 per cent

London's FTSE 100 -0.2 per cent

Germany's DAX -0.2 per cent

France's CAC 40 -0.4 per cent

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Commodities:

WTI crude oil (Nymex Sep) +1.1 per cent at $104.45 (U.S.) a barrel

Gold (Comex Aug) +0.5 per cent at $1,252.10 (U.S.) an ounce

Copper (Comex Sep) +0.4 per cent at $3.08 (U.S.) a pound

Currencies:

Canadian dollar up 0.0013, or 0.13 per cent, at $0.9511 (U.S.)

U.S. dollar index down 0.25 at 84.32

Bonds:

U.S. 10-year Treasury yield 2.63 per cent, down 0.01

STOCKS TO WATCH:

Earnings include: Yum Brands Inc.; Family Dollar Stores; NovaGold Resources Inc.; Sirius XM Canada Inc.; Velan Inc.; American Greetings Corp.; Texas Industries Inc.

Citigroup has upgraded Hewlett-Packard to "buy" from "sell." Shares are up 2.2 per cent in the premarket.

Canaccord Genuity cut its price target on Apple Inc. to $530 (U.S.) from $560, citing more competition and slower sales for the iPhone. Shares are down 0.1 per cent in the premarket.

THIS MORNING'S TOP INVESTING READS ON THE WEB:

You're wrong if you think that interest rate increases over the last month are bad for the stock market.

S&P 500 forward earnings and revenues are at new highs.

Why low expectations for this U.S. earnings season are a huge positive for investors.

Many kinds of stocks and sectors are participating in the S&P 500 rally - and that's a good sign.

Crude oil prices are catching up quickly with energy equities.

Three lessons for income seekers from the founding editor of Morningstar DividendInvestor.

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The premarket report is constantly updated to reflect the latest news developments and market moves. For instant headlines on breaking economic and corporate news in the premarket, follow Darcy Keith on Twitter at @eyeonequities. You can also be notified using our dashboard feature when new articles appear from this author. Read more on using this feature here.

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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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