Investors look to jobs data for hints about Federal Reserve tapering

TORONTO – Investors will likely be taking a wait-and-see attitude Friday with jobs data setting the tone for trading.

The Canadian dollar was little changed ahead of the release of Canadian and American jobs data at 8:30 a.m. EST, down 0.01 of a cent to 95.58 cents US.

Expectations are for Canadian job creation are relatively modest with economists forecasting that about 11,000 jobs were added last month, following a gain of almost 12,000 in September.

U.S. futures were higher ahead of the release of the non-farm payrolls report, also out an hour before markets open.

The Dow Jones industrial futures declined 10 points to 15,557, the Nasdaq futures rose 5.3 points to 3,324.8 and the S&P 500 futures inched up a point to 1,746.25.

Analysts looked for a gain of only about 125,000 U.S. jobs during the month and a slight 0.1 of a point tick upward in the jobless rate to 7.3 per cent.

Economists point out that the number will likely be distorted by the partial U.S. government shutdown during October. Almost half a million federal workers were furloughed during the shutdown and many thousands of other private sector workers who rely on federal contract work were also affected.

Still, investors will look to see what effect the data might have on intentions by the Federal Reserve to start winding up its US$85 billion of monthly bond purchases, a stimulus program that has supported a strong rally on markets.

The TSX lost 86 points Thursday and the Dow industrials tumbled 153 points after a better than expected reading on third quarter U.S. economic growth raised worries that the Fed could start to taper as soon as the end of December.

There was also major acquisition activity in the resource sector as Talisman Energy Inc. (TSX:TLM) reached a deal to sell its interests in two B.C. natural gas partnerships for $1.5 billion in cash. The buyer is Progress Energy Corp., a formerly independent Canadian company that’s now a subsidiary of Malaysia’s state-owned Petronas.

Talisman has said for months that it planned to sell a large chunk of its assets in order to be more efficient and profitable.

It was a relatively quiet day on the earnings front where Air Canada (TSX:AC.B) posted adjusted net income rose of $365 million, an increase of nearly 60 per cent compared with that same time last year. The adjusted earnings amounted to $1.29 per share, which was 26 cents per share above analyst estimates of $1.03 per share. Under standard accounting, Air Canada had $299 million or $1.05 per share of net income, also above estimates but down from last year.

Canada’s largest airline recorded a 4.9 per cent increase in systemwide passenger revenues, compared with the third quarter of last year.

On the commodity markets, December crude on the New York Mercantile Exchange edged up 11 cents to US$94.31 a barrel.

December copper was down a cent to US$3.24 a pound and December bullion was 80 cents lower to US$1,307.7 an ounce.

European indexes declined with London’s FTSE 100 index down 0.47 per cent, Frankfurt’s DAX lost 0.7 per cent and the Paris CAC 40 dropped 1.14 per cent.

Asian markets closed lower. Japan’s Nikkei 225 sank one per cent, Seoul’s Kospi dropped one per cent, Hong Kong’s Hang Seng slid 0.6 per cent and in mainland China, the Shanghai Composite fell 1.1 per cent.