TSX to head lower after 3 days of gains mixed; traders look to jobs data

TORONTO – The Toronto stock market looked set to step back Thursday after a string of gains while prices on commodity markets declined.

The Canadian dollar rose 0.43 of a cent to 99.01 cents US.

U.S. futures were mixed with the Dow Jones industrial futures up eight points to 14,741, the Nasdaq futures dipped 6.5 points to 2,846.75 while the S&P 500 futures edged up 0.5 of a point to 1,583.25.

Both the Dow and the S&P closed at record highs on Tuesday as traders dismissed the minutes to the March policy meeting of the Federal Reserve, which showed there was a debate over when to end the stimulus program. The minutes were viewed as outdated because the meeting was held about two weeks before the release of the government’s March employment report last Friday. The data widely missed expectations and further persuaded investors that the Fed won’t be ending its program of buying bonds anytime soon.

The TSX posted its third straight gain Wednesday, helped along by Chinese data showing a sharp uptick in imports, raising hopes for stronger performance from the world’s second-biggest economy. The showing put the TSX back into positive territory year to date after gains were wiped out in a 3.25 per cent tumble last week.

The positive trade data followed the release of lower inflation data Tuesday, which indicated to markets that the government has more leeway to stimulate the economy, which grew 7.9 per cent in the three months ended in December, up from the previous quarter’s 7.4 per cent.

On Thursday, traders looked to the weekly U.S. jobless claims figures as traders try to assess whether last week’s disappointing employment numbers were a harbinger of more difficult times ahead. The consensus view in the markets is that claims amounted to around 365,000 last week.

Over the coming days, the focus will increasingly turn toward U.S. companies as they report first-quarter earnings. So far, the results have been mixed. On Friday, bank earnings will be in the spotlight with updates from JP Morgan Chase & Co. and Wells Fargo Bank.

Meanwhile, Hudson’s Bay Company (TSX:HBC) posted fourth-quarter earnings that were down compared with a year ago as its Lord & Taylor operations in the United States felt the impact of hurricane Sandy. HBC’s net earnings from continuing operations were $93.6 million or 81 cents per share for the 14 weeks ended Feb 28, down $5.6 million from a year ago.

Earnings ex-items were $99.3 million or 86 cents per share during the most recent quarter, up from $94.8 million a year earlier. Overall sales grew $86.89 million to $1.39 billion.

On the commodity markets, the May crude contract on the New York Mercantile Exchange declined 11 cents to US$94.53 a barrel.

May copper dipped two cents to US$3.40 a pound while June bullion was off 30 cents to US$1,558.50 an ounce.

Gold slid 1.7 per cent on Wednesday, partly on speculation that Cyprus will sell 400 million euros of the precious metal as part of its financial bailout.

The cost of bailing out Cyprus has swollen to €23 billion, with the country having to take on the lion’s share of the measures needed to avoid bankruptcy, according to a draft document by the country’s international creditors.

The draft document says the country will have to find €13 billion, an increase on the €7 billion contribution agreed during the country’s chaotic bailout talks last month. The money will be raised by imposing heavy losses on large bank deposits, levying additional taxes, privatizations and a part-sale of the central bank’s gold reserves.

European bourses were positive as London’s FTSE 100 index gained 0.25 per cent while Frankfurt’s DAX and the Paris CAC 40 rose 0.5 per cent.

Earlier in Asia, the Nikkei 225 in Tokyo jumped nearly two per cent, riding a wave of enthusiasm for the Bank of Japan’s aggressive new approach to stimulating the world’s third-largest economy out of a prolonged slump. That new approach has piled pressure on the yen.

Elsewhere in Asia, South Korea’s Kospi added 0.7 per cent.