
TSX heads for higher open, traders look to U.S. factory orders, vehicle sales
TORONTO – The Toronto stock market looked set for a positive open Tuesday ahead of key economic data that traders hope will reinforce the view that the U.S. recovery is still on track, helping to make up for worsening conditions in Europe.
The Canadian dollar was up 0.35 of a cent to 98.71 cents US.
U.S. futures were also positive as the Dow Jones industrial futures gained 59 points to 14,548, the Nasdaq futures were ahead 18.8 points to 2,806.8 and the S&P 500 futures climbed 6.5 points to 1,562.5.
Traders looked to the February report on U.S. factory orders, which was expected to show a three per cent jump following a decline in January. At the same time, a key reading on manufacturing in the U.S. Northeast, the New York Purchasing Managers Index, was expected to drop slightly from February’s 10-month high of 58.8.
Auto sales figures for the U.S. and Canada also come out during the day.
“American sales have been cruising at a plus-15 million annualized rate for the past four months and show no sign of slowing,” observed BMO Capital Markets senior economist Alex Koustas.
“Canadian sales shot out of the gate in Q1 2012, and while they haven’t quite kept up the near-record pace in 2013, they’re still set in the fast lane cruising at a plus-1.7 million annualized rate.”
The steady recovery in the U.S. has been supporting markets in the face of financial trouble in the 17-country eurozone, where the economy continues to shrink as governments deal with high levels of debt by imposing deep budget cuts. Data released Tuesday showed that unemployment in the single-currency bloc hit a record high in January and February of 12 per cent, the highest since the currency was launched in 1999.
The tiny Mediterranean country of Cyprus has also recently deepened concerns about the future of the currency union. The worry in the markets is that the chaos surrounding the country’s bailout may have further dented confidence across the eurozone, which could further depress economic performance.
Traders also looked ahead to March employment data for Canada and the U.S. coming out Friday.
Economists expect American job gains totalled about 190,000 in March after the economy cranked out 236,000 jobs in February, with the unemployment rate staying unchanged at 7.7 per cent.
In Canada, Statistics Canada was expected to report that about 10,000 jobs were created in March. However, CIBC said in a note that it expects only about 5,000 new positions following a blowout performance in February when 50,700 jobs were created.
On the commodity markets, the May crude contract on the New York Mercantile Exchange dipped 20 cents to US$96.87 a barrel.
May copper was unchanged at US$3.37 a pound while June gold bullion declined $3 to US$1,597.90 an ounce.
European markets were up sharply despite the glum jobless data as London’s FTSE 100 index rose 1.2 per cent, Frankfurt’s DAX gained 1.28 per cent and the Paris CAC 40 climbed 1.12 per cent.
Earlier in Asia, Japan’s Nikkei 225 tumbled 1.1 per cent as the yen’s recent weakness reversed course. A stronger currency makes products sold abroad more expensive, a hardship for Japan’s export-dependent economy.
Analysts said, however, that the new government in Japan, with its new plan of attack to right the country’s economy, has lifted business optimism.
Hong Kong’s Hang Seng closed 0.3 per cent higher, Australia’s S&P/ASX 200 advanced 0.4 per cent, South Korea’s Kospi was 0.5 per cent down. Benchmarks in mainland China, the Philippines and New Zealand also fell.
In corporate news, TransCanada Corp. (TSX:TRP) has begun seeking firm commitments from parties interested in new capacity for shipping oil from Western to Eastern Canada. The Energy East Pipeline project will involve 3,000 kilometres of existing natural gas pipeline, converted to carry crude, and 1,400 kilometres of new pipeline that could stretch as far as New Brunswick. TransCanada is seeking binding commitments for delivery points in Montreal, Quebec City and Saint John, N.B.
Commodities trader Glencore says its expected merger with mining company Xstrata PLC will take longer than planned to allow Chinese regulators to give approval.
Glencore, which supplies raw materials such as oil, copper and wheat and owns plants, warehouses and mines, says the deadline for the merger was extended to May 2 and is “conditional” on Chinese regulatory approval and other court matters.
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