TSX heads for flat open, N.Y closed for Memorial Day; traders look to bank earns

TORONTO – The Toronto stock market looked set for a flat open in what will likely be a quiet session with New York markets closed for the U.S. Memorial Day holiday.

The Canadian dollar rose 0.07 of a cent to 92.07 cents US.

European markets ran ahead after Ukraine’s new president-elect promised to negotiate an end to a pro-Russia insurgency in the east and saying he was willing to begin talks with Moscow. The offer from 48-year-old chocolate magnate Petro Poroshenko raised hopes that his election will indeed ease the protracted crisis that has fuelled tensions unseen since the end of the Cold War.

Also, European Central Bank President Mario Draghi said the bank could engage in large-scale bond purchases to combat the negative spiral of low inflation if need be.

Draghi’s remarks at a conference in Sintra, Portugal, held out the prospect for action to stimulate the weak recovery at the ECB’s next governing council meeting June 5.

The meeting will take place against the background of a slow recovery in the 18 countries that share the euro currency and concern that Europe may fall into outright deflation, or a crippling downward price spiral.

Frankfurt’s DAX gained 1.45 per cent while the Paris CAC 40 was ahead 0.8 per cent. London was also closed for a holiday.

Commodity markets were closed in New York, but crude moved higher in electronic trading with the July contract down 28 cents to US$104.07 a barrel.

Metals were higher with July copper ahead two cents to US$3.19 a pound, while June bullion gained $1.80 to US$1,293.50 an ounce.

Although it is quiet on the Canadian corporate and economic front, there are major items coming up later in the week.

Investors will take in earnings from National Bank (TSX:NA) and Scotiabank (TSX:BNS) on Tuesday, Bank of Montreal (TSX:BMO) on Wednesday and CIBC (TSX:CM) on Thursday. Hopes are high for another series of solid reports after Royal Bank (TSX:RY) and TD Bank (TSX:TD) posted earnings reports last week that blew past expectations with strong contributions from major divisions and lower loan loss provisions.

Those bank earnings helped push the TSX up 1.33 per cent last week.

At the same time, traders will be looking for the latest growth data to see if the American economy actually contracted in the first quarter.

The first revision to U.S. gross domestic product data will be released on Thursday. The initial report showed growth coming in at a paltry 0.1 per cent as severe winter weather impacted the economy. But markets are braced for a worse reading that would show the U.S. economy shrank in the first quarter.

Meanwhile, Statistics Canada releases the latest gross domestic reading for March and the first quarter on Friday. Economists are looking for an annualized rise of 1.7 per cent for the quarter and 0.1 per cent for the month.