TSX to open up, Fed eases market concerns; BlackBerry plunges 19% on Q1 miss

TORONTO – The Toronto stock market headed for a positive open Friday but the market will be weighed down by BlackBerry (TSX:BB) (NASDAQ:BBRY) after the smartphone maker surprised traders with a quarterly loss and disappointing revenue.

BlackBerry shares plunged 19.9 per cent to US$11.60 in pre-market trading in New York after saying that it lost US$84 million in the first quarter, a period when the company launched its latest Z10 touchscreen model. That was a big improvement from a US$518-million loss a year ago. BlackBerry’s adjusted loss from continuing operations was $67 million, or 13 cents per share, but analysts had been expected an adjusted profit of six cents per share.

BlackBerry’s revenue also was disappointing. It increased to $3.07 billion from $2.81 billion a year ago but fell short of the expected US $3.38 billion.

The Canadian dollar dipped 0.04 of a cent to 95.43 cents US ahead of the release of April economic growth figures. The consensus estimate called for gross domestic product to have grown by 0.1 per cent.

U.S. futures pointed to a positive session, reflecting an atmosphere of calm that seemed to have settled on markets late this week.

The Dow Jones industrial futures gained 25 points to 14,961, the Nasdaq futures advanced six points to 2,905.5 and the S&P 500 futures were up five points to 1,611.5.

Markets had sold off after Federal Reserve chairman Ben Bernanke had indicated June 19 that the central bank could start winding up one of its signature stimulus programs, the purchase of US$85 billion worth of bonds every month with the aim of keeping long-term rates low.

The change in sentiment was due to a number of factors, including solid U.S. economic data and a seeming attempt by the U.S. Federal Reserve to ease investor concerns over the pace of any reduction in its monetary stimulus. The so-called tapering of the purchases raised fears because the stimulus has been one of the drivers for stocks over recent years.

Also spooking traders was a spike in bond yields with the benchmark 10-year Treasury surging from 2.25 per cent before Bernanke’s comments to as high as around 2.6 per cent. But yields backed off Thursday after three Fed officials said markets are unrealistic in their anticipation of rate hikes down the road.

Fed Gov.Jerome Powell said the spike in bond yields over the past month is “larger” than would be justified by any “reasonable reassessment” of the path of Fed policy. On Friday morning, the 10-year bond yielded 2.47 per cent.

Commodity prices were mixed with the August crude contract on the New York Mercantile Exchange up 12 cents to US$97.17 a barrel.

September copper gained a cent to US$3.06 a pound. But the August bullion contract on the Nymex was down $9.60 to US$1,202 an ounce. Continued speculation about when the Federal Reserve may ease up on its monthly bond purchases has pushed bullion prices to three-year lows. Gold prices have deteriorated steadily this year as the precious metal loses its appeal as a hedge against inflation and deteriorating currencies.

The main U.S. economic data later will be a manufacturing survey around the Chicago region and the University of Michigan’s latest assessment of consumer confidence around the country.

Earlier in Asia, Hong Kong’s Hang Seng advanced 1.8 per cent while mainland Chinese shares also rose as fears eased of a credit crunch in China. The Shanghai Composite Index gained 1.5 per cent while the smaller Shenzhen Composite Index edged up less than 0.1 per cent.

The central bank had allowed rates that banks pay to borrow from each other to soar last week, part of an attempt to clamp down on massive credit in the informal lending industry. Later, however, Chinese policymakers softened their stance with the promise to provide “liquidity support” if needed.

European bourses were mixed with London’s FTSE 100 index ahead 0.17 per cent. Frankfurt’s DAX dipped 0.09 per cent while the Paris CAC 40 was off 0.23 per cent.