TSX to open higher, traders hope for limited U.S. government shutdown

TORONTO – The Toronto stock market appeared set for a higher open Tuesday as traders hoped for a quick end to the partial shutdown of the U.S. government that began at midnight due to a political impasse in Washington.

The Canadian dollar was unchanged at 97.06 cents US amid broad U.S. dollar weakness.

The Dow Jones industrial futures gained 29 points to 15,075, the Nasdaq futures rose 8.5 points to 3,217.5 and the S&P 500 futures gained 3.75 points to 1,678.

U.S. futures were higher even though a sharply divided Congress failed to approve a short-term funding agreement before midnight. The clock is also ticking towards an even more worrisome prospect, an Oct. 17 deadline when the U.S. government hits its debt limit and begins to run out of cash to pay its bills.

“The bigger market risk event remains a breach of the debt ceiling,” said a commentary from Barclays Research.

“We expect such an event to be more broadly risk negative. A higher risk of a U.S. sovereign default should lead to a flight to liquidity and, ironically, a stronger U.S. dollar.”

Some critical parts of the government, from the military to air traffic controllers, will remain open, and analysts said significant damage to the country’s economy was unlikely unless the shutdown lasted more than a few days.

Oil prices were little changed after worries about the effect of the shutdown on the U.S. economy and weak Chinese manufacturing data pushed crude lower. The November crude contract on the New York Mercantile Exchange added two cents to US$102.35.

Metal prices were lower with December copper three cents lower at US$3.30 a pound while December gold faded 90 cents to US$1,326.10 an ounce.

In corporate news, real estate services company FirstService Corp. (TSX:FSV) has sold Field Asset Services, a business that provides property services in the United States, for $55 million cash to Assurant Inc. (NYSE:AIX).

European bourses were mixed as data showed that unemployment across the eurozone held steady in August, in another sign that the eurozone economy is stabilizing following its longest-ever recession.

Eurostat, the EU’s statistics office, said the unemployment rate was 12 per cent in August, unchanged from the previous month and down modestly from the 12.1 per cent peak recorded in the summer.

London’s FTSE 100 index down 0.48 per cent, Frankfurt’s DAX gained 0.45 per cent while the Paris CAC 40 was ahead 0.6 per cent.

Earlier in Asia, Japanese stocks rose after a business survey showed mounting confidence among the country’s manufacturers.

The Nikkei 225 in Tokyo advanced 0.2 per cent after the latest quarterly “tankan” survey showed a sharp improvement from the prior period. Large manufacturers were especially upbeat, with a reading of positive 12, up from 4 in the July survey.

Elsewhere, South Korea’s Kospi settled 0.1 per cent higher and Australia’s S&P/ASX 200 fell 0.2 per cent.

Markets in mainland China and Hong Kong were closed for public holidays and couldn’t react to a survey showing that manufacturing in the world’s second-biggest economy barely expanded in September.