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Bay Street Seen Opening On Cautious Note

Bay Street is likely to see a cautious opening on Monday, tracking lower Canadian and U.S. index futures and weakness in European markets.

However, higher crude oil and gold prices may trigger some buying in energy and materials sections and limit market's fall.

Trade talks between the U.S. and Chinese officials have begun at Beijing, raising hopes of a possible trade deal between the world's largest economies, but worries about global growth still persist, and this could make investors a bit wary of building up positions at higher levels.

Meanwhile, with the latest round of talks between legislators failing to break an impasse, the U.S. government shutdown has entered its third week now. Reports that President Donald Trump is threatening to wield presidential power to declare a national emergency to bypass Congress and build his border wall are likely to hurt investor sentiment.

On Friday, the Canadian benchmark S&P/TSX Composite Index ended up 213.87 points, or 1.5%, at 14,426.62, slightly off the day's high of 14,438.60.

In company news, Suncor Energy Inc (SU.TO) announced that it expects a 13% increase in total upstream production in the fourth quarter thanks to higher output from its majority-owned Syncrude oil project in northern Alberta.

On the economic front, the Ivey Purchasing Managers Index for December is due for release at 10:00 AM ET.

Asian markets ended higher on Monday, amid optimism about U.S.-China trade talks and the Federal Reserve Chairman Jerome Powell's remarks last week that the central bank would take a flexible approach with regard to monetary tightening and take a stance after seeing how the economy evolves. A fairly upbeat U.S. jobs data for the month of December also lifted sentiment in Asia.

European markets retreated after a positive start and were mostly down in negative territory. Profit taking after recent strong gains, Brexit uncertainty and weak eurozone investor sentiment report contributed to the decline in prices.

In economic news from U.S., a report from the Institute of Supply Management regarding services sector activity in December is due at 10:00 AM ET.

Data on factory orders for the month of November is also due at 10:00 AM ET.

In commodities, crude oil futures for February were rising $1.10, or 2.3%, at $49.06 a barrel.

Natural gas futures for February were down $0.073, or 2.41%, at $2.971 per million btu.

Gold futures for February were rising $8.25, or 0.66%, at $1,294.05 an ounce.

Silver futures for March were up $0.056, or 0.35% at $15.842 an ounce, while Copper futures were declining $0.007, or 0.27%, at $2.640 per pound.

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