TSX set to open up: traders look to key U.S. economic data, Cyprus bank crisis

TORONTO – The Toronto stock market was set for a positive session Tuesday as traders looked ahead to the morning release of key U.S. housing and consumer confidence data.

The financial crisis in Cyprus also kept investors focused as the country’s banks are all scheduled to stay closed until Thursday. Before a late Monday night decision, all but the Bank of Cyprus and Laiki, were due to reopen on Tuesday, having been closed for 10 days. No reason has been given for the further delay but fears of a bank run are thought to have played a role in the decision.

The Canadian dollar was up 0.1 of a cent to 98.12 cents US.

U.S. futures were also positive with the Dow Jones industrial futures ahead 25 points to 14,411. The Nasdaq futures were up 7.5 points at 2,791.8 while the S&P 500 futures rose three points to 1,550.

Stocks whipsawed Monday, starting off positive on relief that Cyprus had secured a €10-billion bailout loan. The country also had to come up with almost €6 billion on its own and it is doing this by slashing its oversized banking sector and inflicting hefty losses on large depositors in troubled banks.

But markets closed lower after Jeroen Dijsselbloem, who chairs the meetings of the finance ministers of the 17 European Union countries that use the euro, said the Cyprus bailout was a template.

He later attempted to retract his comments and described Cyprus as a “specific case with exceptional challenges.” But he left the impression that those with bank deposits above the uninsured level of €100,000 may be tapped in any future bailout.

“The initial (and brief) optimism surrounding the deal was met with the cold reality of the question “where do we go from here?” said BMO Capital Markets senior economist Carl Campus.

“Ratings agencies and investors alike are on high alert.”

On the economic calendar, the U.S. Case/Schiller home price index is estimated to have increased by 0.6 per cent in January, which would be the 12th monthly increase. Other data is expected to show new home sales in the U.S. gained 15 per cent to an annualized level of 437,000, which would be the highest level since July 2008.

Economists also expected a slight pullback in U.S. consumer confidence in March.

Elsewhere, it is expected that another report will show that durable goods orders in the U.S. increased by 3.8 per cent in February after dropping 5.2 per cent month over month in January.

Prices were mixed on commodity markets as the May crude contract on the New York Mercantile Exchange gained 52 cents to US$95.33 a barrel.

May copper gained one cent to US$3.46 a pound while April gold bullion declined $7.80 to US$1,596.70 an ounce.

European bourses were lacklustre with London’s FTSE 100 index flat, Frankfurt’s DAX up 0.13 per cent and the Paris CAC 40 ahead 0.24 per cent.

Earlier in Asia, Japan’s Nikkei 225 index fell 0.6 per cent, Hong Kong’s Hang Seng rose 0.3 per cent, Australia’s S&P/ASX 200 dropped 0.8 per cent and South Korea’s Kospi rose 0.3 per cent.

Mainland Chinese shares fell, with the Shanghai Composite Index losing 1.2 per cent while the smaller Shenzhen Composite Index lost 0.7 per cent. Losses were attributed to moves by the government to cool off the real estate sector.

In other market news, the European Union’s competition watchdog is expanding its investigation of the credit default swaps market to include a major derivatives trade body representing financial institutions.

The EU Commission is also investigating the International Swaps and Derivatives Association (ISDA) after finding “preliminary indications” that it may have assisted investment banks to delay or prevent others from entering the credit derivatives business.

The global derivatives market has an estimated value of around US$700 trillion. CDS are a tradable form of insurance for bonds in case of default.