TSX to rise, Scotiabank beats expectations, traders look to durable goods data

TORONTO – The Toronto stock market was in for a positive start to the trading day Tuesday as traders took in earnings from Scotiabank that beat analysts’ forecasts and looked ahead to the release of U.S. durable goods and housing data.

The Canadian dollar was up 0.16 of a cent to 92.24 cents US.

U.S. futures were also higher as traders get back to work following the Memorial Day holiday weekend with the Dow Jones industrial futures ahead 53 points to 16,639, the Nasdaq futures were up 17 points to 3,692 and the S&P 500 futures climbed 6.75 points to 1,903.75.

Scotiabank (TSX:BNS) boosted its second-quarter net profit by 14 per cent to $1.8 billion, helped by its Canadian banking and global wealth and insurance segments. Adjusted diluted earnings per share were $1.40, beating analysts’ estimates of $1.31 a share. However, the provision for credit losses was up $32 million to $375 million in the quarter, primarily due to higher provisions in its international banking segment.

The strong showing followed reports last week from Royal Bank (TSX:RY) and TD Bank (TSX:TD) which also beat expectations. The rest of the banks report this week and National Bank (TSX:NA) was set to hand in earnings Tuesday after the market close.

On the economic front, investors hoped that the April reading on U.S. durable goods orders will see a rebound in business capital spending. Economists estimate that orders fell 0.2 per cent, but factoring out the aircraft segment, they likely grew by 0.1 per cent.

Investors will also digest the latest Case/Schiller’s home price index.

There was also major buying activity in the food business as Pilgrim’s Pride offered to acquire meat producer Hillshire Brands in a deal worth about US$5.58 billion. The poultry producer is offering $45 per share for Hillshire, which makes Hillshire Farm lunch meats and Jimmy Dean sausages, which is a 24 per cent premium to Hillshire’s closing price Friday.

Pilgrim’s Pride says the deal is a better offer than Hillshire’s plan to buy Pinnacle Foods for $4.23 billion. Pinnacle makes Birds Eye frozen vegetables and Duncan Hines cake mixes.

In other corporate news, IntercontinentalExchange Group, Inc. is floating its European stock exchange Euronext as an independent company. Atlanta-based ICE said Tuesday it is launching an initial public offering of ordinary shares in Euronext NV. The pan-European company operates exchanges in Paris, Amsterdam, Brussels and Lisbon.

Euronext merged with the New York Stock Exchange or NYSE in 2006, and the joint company was bought by ICE last year in a deal worth about $8 billion.

Prices were mixed on commodity markets as July crude in New York declined 23 cents to US$104.12 a barrel.

June bullion was down $10.10 to US$1,281.60 an ounce, while July copper was unchanged at US$3.17 a pound.

Markets are also keeping a wary eye on developments in Ukraine after Sunday’s presidential elections.

Russia’s acceptance of billionaire businessman Petro Poroshenko as Ukrainian president had raised hopes for an easing of tensions. But hours after he was declared the victor, pro-Russian rebels escalated the Ukrainian conflict by occupying a major airport in the country’s east and Kiev retaliated with an air strike.