Toronto stock market set to advance amid rising commodities, heavy slate of data

TORONTO – The Toronto stock market headed for a higher open Wednesday amid a busy day for economic data and corporate earnings.

The Canadian dollar was ahead 0.09 of a cent to 97.16 cents US as traders get set to take in the latest data on economic growth in Canada and the U.S. Economists expect that Canadian gross domestic product grew by 0.3 per cent in May while U.S. GDP growth for the second quarter was expected to come in at about one per cent, down from 1.8 per cent in the first quarter.

U.S. futures were mixed ahead of the end of a two-day meeting of the U.S. Federal Reserve on interest rates. The central bank makes its announcement at 2 p.m. EDT.

The Dow Jones industrial futures declined 14 points to 15,479, the Nasdaq futures were up 0.5 of a point to 3,086 while the S&P 500 futures rose 0.9 of a point to 1,685.6.

There has been much speculation surrounding the Fed over the last two months, since chairman Ben Bernanke first mentioned that the central bank could start to taper its US$85 billion of monthly bond purchases later this year if economic conditions warrant. This key piece of economic stimulus is credited with keeping long term rates low and fuelling a strong rally on markets.

Investors will be looking over earnings from gold miners Yamana Gold (TSX:YRI), Centerra Gold (TSX:CG) and Kinross Gold (TSX:K). Insurance giant Great West (TSX:GWO) also posts results Wednesday, along with Suncor Energy (TSX:SU) and Sherritt International (TSX:S).

Earlier in the morning, media company Torstar Corp. (TSX:TS.B) had $18 million of net income attributable to shareholders, or 23 cents per share. That was down from $32.6 million or 41 cents per share a year ago with its Harlequin book publishing operations especially affected by lower volumes overseas. Torstar’s total revenue was $354.9 million, down 7.5 per cent from $383.9 million.

Talisman Energy (TSX:TLM) reported a $27 million loss from operations, or three cents per share, in the quarter, down from a year earlier profit of $71 million or seven cents per share. Analysts polled by Thomson Reuters had recently lowered their estimates for Talisman to less than a cent per share of adjusted earnings.

Talisman also reported cash flow of $526 million, down from $803 million a year ago. Production averaged 361,000 barrels of oil equivalent, down from 435,000 barrels in the corresponding quarter of 2012. Talisman also revised its 2013 production guidance to the lower end of estimates.

Overseas, German automaker Volkswagen AG says net profit fell 50 per cent to 2.85 billion euros in the second quarter compared to the previous year, when earnings were boosted by a one-time accounting plus related to its takeover of Porsche.

Excluding the Porsche effect, the company’s operating earnings rose 1.8 per cent in what it called “a difficult market environment,” beating analyst estimates and indicating the company was holding its own in a difficult European auto market. It said it would still achieve its earnings goal for the year.

The TSX fell 87 points Tuesday, led by plunging shares of big North American potash producers after a Russian-based rival broke up a European marketing group and announced plans to run at full capacity. The move by OAO Uralkali signalled that potash prices will weaken considerably.

Shares in the rival Canpotex potash marketing group were hard hit with PotashCorp of Saskatchewan (TSX:POT) losing 16 per cent, Agrium (TSX:AGU) dropped five per cent and in New York, Mosaic (NYSE:MOS) tumbled 18 per cent.

Commodity prices were higher as the September crude contract in New York up 28 cents to US$103.36 a barrel.

September copper rose three cents to US$3.07 after falling seven cents Tuesday. December bullion gained $4.20 to US$1,329 an ounce.

The TSX is ending July trading with a 3.72 per cent gain on the month, leaving the Toronto market up 1.2 per cent year to date. Gains during July were paced by a gain of 4.5 per cent in the energy sector as oil prices firmed above US$100 a barrel amid a series of sharp inventory drops in the U.S.

The gold sector is up about eight per cent, leaving the component down about 39 per cent year to date, an improvement from a 50 per cent drop registered earlier. Base metal miners were also attractive to investors and the sector gained one per cent for July but is still down 29 per cent for the year to date.

Earlier in Asia, Japan’s Nikkei 225 index tumbled 1.5 per cent, Hong Kong’s Hang Seng fell 0.3 per cent, South Korea’s Kospi dropped 0.2 per cent and Australia’s S&P/ASX 200 advanced 0.1 per cent.

European bourses were mixed with London’s FTSE 100 index up 0.6 per cent, Frankfurt’s DAX declined 0.36 per cent and the Paris CAC 40 was down 0.33 peer cent.