Investors are also focused on the European Central Bank, which is widely expected to launch its own stimulus program of quantitative easing this week.
"There's a lot of things going on right now. And I think that because of this you‘re getting to a point where people really don't know what to do," said Colin Cieszynski, chief market strategist at CMC Markets.
Also, the battered Canadian dollar could see further declines depending on what the Bank of Canada has to say next week about interest rates and economic conditions.
North American markets continued to register losses last week with the TSX losing 76 points or 0.5 per cent on top of a 2.5 per cent drop the previous week. The Dow industrials fell 225 points or 1.27 per cent.
But the base metals sector underwent a severe mauling, losing a good 15 per cent just last week as copper prices went into full retreat, falling below US$2.50 a pound in the worst performance since the 2008 financial crisis. The slide came amid weak trade data from China and a cut in the World Bank's estimate for global growth this year.
Energy stocks were neutral as oil seemed to find some support around the US$45 a barrel level last week.
Prices have plunged almost 40 per cent since the end of November after the Organization of Petroleum Exporting Countries ruled out production cuts to support prices. Overall, prices are down about 55 per cent from the highs of June 2014 amid a huge supply/demand imbalance.
But even with prices showing some stability last week, Cieszynski thinks it would be a big mistake to think that the worst is over for the energy sector and wonders how long it will take for investors to realize that prices won't be bouncing substantially higher.
"You think this is like the collapse in the mid-80s, which was the last time they had a real oil price war and, with that one, oil stayed down for 10 years except for five months," he noted.
Meanwhile, the U.S. fourth-quarter earnings season gains momentum this week and Bob Gorman, chief portfolio strategist at TD Waterhouse, doesn't think that market analysts fully appreciate how the U.S. dollar will impact earnings.
And that could be problematic as the sharp rise of the U.S. dollar significantly affects foreign earnings translated back into U.S. dollars.
The greenback has surged in recent months as the Federal Reserve ended its third round of quantitative easing at the end of October. Also, the currency has made great headway against the euro because of overall economic malaise in the eurozone and the growing probability the ECB will launch a QE program on Thursday, which would involve buying up large amounts of bonds.
"The fourth-quarter earnings are going to be a dash of cold water," said Gorman, who noted that analysts had earlier been forecasting year-over-year earnings growth for S&P 500 companies in the neighbourhood of 10 per cent.
"I think this earnings season may see some more choppiness than you have generally seen because the pattern has been, going into quarterly earnings, the market is worried, sells off, earnings come out, there are positive surprises, the market goes up. I’m not so sure you see that this quarter. For the year, I think (earnings growth) is probably plus five to six per cent and that’s in line with the historical norms."
Meanwhile, the Bank of Canada makes its next interest rate announcement Wednesday, along with its latest Monetary Policy Report and a news conference by bank governor Stephen Poloz.
The bank is universally expected to leave its key rate at one per cent, where it has been since September 2010. But there has been plenty of speculation that the bank could move to hike later in the year, after the Fed starts hiking its own rates away from near zero.
Lower oil and gasoline prices are seen as a big plus for the economy. But the big question for the bank is: how have plummeting oil prices affected the overall economy? And does the collapse in prices mean there are good reasons for leaving rates unchanged for an extended period.
"There is downside risk coming from the large drop in oil prices since the summer," said Todd Mattina, chief economist and strategist at Mackenzie Investments.
"Lower prices have given Canadian households a boost in disposable income and should boost private household spending, which is positive for growth. Of course, on the other hand, you have lower business investment in the oilpatch and lower employment in the oil sector in supporting industries. So the net impact is still a little unclear."