TSX to head slightly higher after solid gains; traders look to U.S. GDP data

TORONTO – The Toronto stock market looked set for a slightly higher open as commodity prices made solid gains for a second day and traders looked to the first reading on how the American economy performed during the first quarter.

Strengthening prices for oil and metals also helped push the Canadian dollar ahead 0.26 of a cent to 97.76 cents US.

U.S. futures were positive as markets expect the data to show gross domestic product grew at an annualized rate of three per cent in the January to March period.

The Dow Jones industrial futures were ahead 47 points to 14,662, the Nasdaq futures climbed 13 points to 2,837 and the S&P 500 futures rose 6.5 points to 1,580.5.

Traders will be looking to U.S. jobless insurance claims for last week. It’s expected that unemployment claims dipped by 2,000 to 350,000.

Positive earnings reports in the resource sector and surging commodities pushed the TSX up 179 points Wednesday, clawing back a good chunk of last week’s 2.2 per cent tumble amid signs of slowing global growth, especially in China.

The June crude contract on the New York Mercantile Exchange gained three cents to US$91.46 a barrel after advancing more than $2 on Wednesday in the wake of data showing a much weaker than forecast rise in U.S. inventories last week.

May copper gained five cents to US$3.20 a pound after running up six cents Wednesday on hopes that the European Central Bank will cut interest rates in order to stimulate the economy next Thursday.

“The case for an ECB rate cut at the 2 May policy meeting is quite strong,” said Neil MacKinnon, global macro strategist at VTB Capital.

Also, Goldman Sachs said the outlook for copper prices are expected to rebound in the next three months, aided by Chinese growth in the second half of the year.

June bullion gained $21 to US$1,444.70 an ounce.

On the earnings front, 3M shares fell almost four per cent in pre-market trading in New York as net income was just slightly higher from a year ago at $1.13 billion, or $1.61 per share. A year ago its net income worked out to $1.59 per share. Revenue rose two per cent to $7.63 billion. Revenue and profits were both short of analyst expectations.

3M, the maker of Scotch tape and construction and safety materials, is a good window into the broader economy.

In Canada, Precision Drilling Corp.’s (TSX:PD) net income fell to $93 million or 33 cents per diluted share, down 16 per cent from the first quarter of 2012. Its revenue dropped by seven per cent to $596 million, mainly due to lower North American drilling activity compared with the first quarter of 2012. Nevertheless, the results were ahead of analyst estimates and Precision Drilling will pay a quarterly dividend of five cents per share on May 15.

European bourses advances with London’s FTSE 100 index ahead 0.1 per cent as official figures showed the country’s economy grew by a greater than anticipated quarterly rate of 0.3 per cent in the first three months of the year.

Many in the markets were predicting that Britain would sink into its third recession in less than five years. But the rise eased expectations that the Bank of England will soon announce another big monetary stimulus.

Frankfurt’s DAX gained 0.64 per cent and the Paris CAC 40 was up 0.14 per cent.

Earlier in Asia, Japan’s Nikkei 225 rose 0.6 per cent while Hong Kong’s Hang Seng advanced one per cent and South Korea’s Kospi added 0.8 per cent.