Toronto stock market set to advance as economic data balances rate concerns

TORONTO – The Toronto stock market was set to head higher, building on the gains of the previous session amid positive economic data from the United States.

The Canadian dollar was down 0.05 of a cent at 88.9 cents US.

U.S. futures were also higher after data suggested that U.S. economic growth should bounce back following a harsh winter.

The Dow Jones industrial futures rose 39 points to 16,304, the Nasdaq futures climbed 10.8 points to 3,702.3 and the S&P 500 futures were ahead 5.25 points to 1,871.25.

The Conference Board’s index of leading indicators, an indicator of future economic activity, rose in February by the largest amount in three months.

And a key manufacturing reading, the Philadelphia Fed’s manufacturing index, rebounded in March from a negative reading in February.

The data helped persuade investors that the U.S. economy is strengthening to a point where it can withstand higher short term rates.

Federal Reserve chair Janet Yellen said Wednesday that the U.S. central bank could begin raising short-term rates six months after it halts its bond purchases around year’s end. The Fed has been cutting back on those purchases, a key element of stimulus that had kept long-term rates low, in $10 billion increments since December, lowering purchases so far from $85 billion to $55 billion.

“Markets look to be ending the week on a solid footing following the Fed scare earlier in the week,” said a commentary from Barclays Research.

“Fed fund futures look to be pricing the end-2015 Fed funds rate just shy of one per cent.”

The Fed has kept its key rate near zero since the 2008 financial collapse.

Economic optimism sent commodities higher with the May crude contract on the New York Mercantile Exchange up 44 cents to US$99.34 a barrel.

The April gold contract gained $10.10 to US$1,340.60 an ounce while May copper rose four cents to US$2.97 a pound.

On the corporate front, 3,000 workers at Canadian National Railways (TSX:CNR) have rejected a second tentative contract, prompting the company to suggest the talks go to binding arbitration. Teamsters Canada represents conductors, yard workers and other train workers.

Transportation giant Bombardier (TSX:BBD.B) says that tThe international crises over events in Crimea could affect Bombardier’s (TSX:BBD.B) efforts to negotiate a joint venture to build Q-400 turboprops in Russia. Russia is being targeted by western countries for its annexation of the Crimean peninsula.