TSX set for flat open amid heavy slate of earnings news, mixed economic data

TORONTO – The Toronto stock market appeared set to start the trading day little changed amid mixed earnings reports and data that suggested the eurozone economy is growing again.

The Canadian dollar was up 0.11 of a cent to 97.34 cents US as other data showed a deepening slowdown in China’s manufacturing sector.

U.S. futures were higher in the wake of strong earnings reports from Apple Inc. and Ford Motor Co.

The Dow Jones industrial futures gained 37 points to 15,550, the Nasdaq futures ran up 29 points to 3,055 and the S&P 500 futures climbed 6.25 points to 1,694.5.

Cenovus Energy Inc. (TSX:CVE) had $255 million or 34 cents per share in operating earnings and a $179-million net profit in the second quarter. The operating earnings were 14 cents below a consensus estimate of 48 cents as the Canadian oilsands producer recorded a couple of usual items related to its light oil assets. Cenovus also said its 2013 oilsands operating costs this year will be higher than forecast in its previous guidance.

Natural gas producer Encana Corp. (TSX:ECA) had $730 million or 99 cents per share of net earnings and $247 million in operating earnings or 34 cents per share in the second quarter. The operating earnings, which are closely watched by analysts, were up from $198 million or 27 cents per share a year earlier. Analysts polled by Thomson Reuters were on average expecting 19 cents per share in operating earnings.

Also, Canadian Pacific Railway (TSX:CP) posted net income for the second-quarter of $252 million, or $1.43 per diluted share, versus $103 million, or 60 cents per share, a year earlier. A key measure of efficiency, the operating ratio, came in at 71.9 per cent. The smaller the ratio the better and chief executive Hunter Harrison has said the railroad aims to have a ratio in the mid-60s by 2016.

Ford Motor Co. earned $1.2 billion in the second quarter as U.S. pickup truck demand and growing sales in China offset losses in Europe. Ford raised its forecast based on the April-June results. Ford earned 30 cents per share in the latest quarter, the same as a year ago. Without one-time items, including separation payments in Europe, the company earned 45 cents per share. That surpassed analysts’ forecast of 37 cents and its shares ran ahead 3.8 per cent in pre-market trading.

After the close Tuesday, Apple Inc. posted quarterly earnings of $6.9 billion, or $7.47 per share, in its fiscal third quarter, a 22 per cent drop from $8.8 billion, or $9.32 per share. The earnings topped the average estimate of $7.31 per share among analysts surveyed by FactSet.

Revenue totalled $35.3 billion versus $35 billion a year ago. Analysts had projected that revenue would be unchanged from a year ago.

The results mark the second straight quarter that Apple’s earnings have fallen from the previous year after a decade of steadily rising profits. Its shares were up five per cent in pre-market trading in New York.

In other corporate developments, Michael Dell has raised his bid for the computer company he founded to $13.75 per share while the company meeting has been delayed until Aug. 2. He called it the best and final proposal.

Oil prices weakened amid weak Chinese manufacturing data and traders awaited the latest U.S. inventory figures.

The September crude contract on the New York Mercantile Exchange was down 23 cents to US$107 a barrel.

Meanwhile, analysts expected a decline in crude oil inventories of 2.6 million barrels for the week ended July 19. That would bring the four-week drop to nearly 30 million barrels.

A HSBC survey showed China’s manufacturing at an 11-month low this month, a disappointing performance that puts pressure on Chinese leaders to reverse a deepening slowdown in the world’s second-largest economy.

HSBC said the preliminary version of its monthly purchasing managers index declined to 47.7 this month from June’s 48.2 on a 100-point scale on which numbers below 50 show a contraction in activity.

Metal prices advanced with September copper up three cents to US$3.22 a pound while August bullion gained $6 to US$1,340.70 an ounce.

European bourses advanced after financial information company Markit said a broad gauge of economic activity rose for a fourth month in a row. Its monthly purchasing managers’ index for the 17-country eurozone rose to 50.4 points in July from 48.7 the previous month. Anything above 50 indicates an expansion.

London’s FTSE 100 index was up 0.8 per cent, Frankfurt’s DAX gained 1.08 per cent and the Paris CAC 40 was ahead 1.2 per cent.

Earlier during the Asian session, the Shanghai Composite Index in mainland China closed 0.5 per cent lower, Japan’s Nikkei 225 dropped 0.3 per cent, Hong Kong’s Hang Seng gained 0.2 per cent while South Korea’s Kospi rose 0.4 per cent.