Toronto stock market to open higher, traders await end of Fed policy meeting

TORONTO – The Toronto stock market headed for a slightly positive open Wednesday with traders focused on the outcome of the interest rate meeting of the U.S. Federal Reserve.

The Canadian dollar was down 0.39 of a cent to 89.4 cents US. The slide added to Tuesday’s drop of more than 2/3 of a cent after Bank of Canada governor Stephen Poloz said that slower than normal growth may be the new norm. He said that will require central bankers to keep interest rates low for longer than they would have in the past.

Markets also absorbed the surprise announcement after the close Tuesday that Finance Minister Jim Flaherty was stepping down. There is much speculation he will be succeeded by Joe Oliver, who holds the Natural Resources portfolio.

U.S. futures were slightly higher ahead of the afternoon release of the Fed’s announcement and first-ever news conference by Janet Yellen since she took the helm of the Fed earlier this year.

The Dow Jones industrial futures gained 18 points to 16,280, the Nasdaq futures rose 9.5 points to 3,704.5 while the S&P 500 futures climbed 2.5 points to 1,866.3.

Markets widely anticipate the Fed will announce that it deems the economy strong enough to further cut its monthly bond purchases by another US$10 billion to $55 billion.

It is further expected that the central bank will deemphasize the importance of the jobless rate figure as a policy guide for determining when the Fed might hike interest rates.

Finally, traders want to hear the Fed’s take on how much damage was inflicted on the economy by severe winter weather in January and February.

Markets rallied Tuesday after Russian President Vladimir Putin said his country doesn’t want to annex more of Ukraine.

He made the comment as he signed a bill to annex Crimea after the territory’s residents voted overwhelmingly to break away from Ukraine.

Western governments, including Canada, have responded with sanctions that target a variety of people in Russia, Ukraine and Crimea.

Resource stocks could weigh on the TSX as prices for oil and metals declined.

April bullion on the New York Mercantile Exchange edged 10 cents lower to US$99.60 a barrel.

Metal prices also retreated with the May copper contract in New York down two cents to US$2.93 a pound while optimism that the Ukraine crisis won’t worsen pushed gold prices down for a third day. April bullion faded $13.30 to US$1,345.70.

In corporate developments, Athabasca Oil Corp. (TSX:ATH) had a quarterly loss of $40.1-million or 10 cents a share. That compared with a profit of $306.1 million, or 77 cents per share, a year ago when Athabasca recorded an unrealised gain of $374.6 million on the value of its Dover oil sands put option. That option gives Athabasca the right to sell its 40 per cent share of the Dover project for up to $1.32 billion to PetroChina.

The Wall Street Journal says the U.S. Justice Department may reach a US$1 billion settlement with automaker Toyota, ending a criminal investigation into the Japanese automaker’s disclosure of safety problems. The investigation focuses on whether Toyota was forthright in reporting quality problems related to unintended acceleration troubles.