Toronto stock market likely headed downward; markets in Europe closed down

TORONTO – The Toronto stock market was expected to open lower on Wednesday amid a report from the World Bank cutting its 2014 growth forecast and skittish markets in Europe.

The Canadian dollar was up slightly 0.1 of a cent to 91.81 cents US as traders look to news out of a meeting of the Organization for Petroleum Exporting Countries (OPEC).

U.S. futures were negative with the Dow Jones industrial futures down 68 points to 16,945.92, the Nasdaq declined 17.7 points to 3,800.86, while the S&P 500 futures dropped 9.25 points to 1,950.79.

The World Bank cut its 2014 growth forecast to 2.8 per cent from 3.2 per cent, citing a bitter American winter and the political crisis in Ukraine. However, recent data such as solid U.S. hiring and stronger Chinese exports in Maysuggest prospects for growth in the second half of the year aren’t all pessimistic.

In other international business news, oil prices rose ahead of the OPEC meeting in Vienna, where it’s largely expected to keep its output target of 30 million barrels a day unchanged. Benchmark U.S. oil for July delivery was up 30 cents to $104.65 a barrel in electronic trading on the New York Mercantile Exchange.

Energy markets were also affected by Al Qaeda-inspired militants who overran much of the Iraqi city of Mosul on Tuesday. Mosul is in an area that is a major gateway for Iraqi oil.

Stocks markets in Germany, London and France also dropped on Wednesday, amid news from the World Bank and out of Iraq. In Asia, Hong Kong’s Hang Seng closed down and China’s Shanghai Composite posted a small gain.

On the corporate front, the founder of Lululemon yoga wear wants a shakeup among board members at the company he founded. Chip Wilson voted against the re-election of two board members, saying a change is needed to increase shareholder value. Lululemon Athletics Inc. (Nasdaq: LULU) holds its annual shareholder meeting today in Vancouver.

Meanwhile, the Royal Bank says most of Canada will experience stronger economic growth this year and next, but only Alberta will see the kind of gains that will make a real impact on job creation. The latest quarterly report from Canada’s largest bank predicts the overall economy will expand by 2.4 per cent this year and 2.7 per cent in 2015, moderately stronger growth rates than the Bank of Canada expects.

The RBC economists say they believe the U.S. economy is kicking into gear and that — combined with the lower value of the loonie — will result in more demand for Canadian exports.

Former Bank of Canada governor David Dodge is taking issue with the notion that balancing government budgets as quickly as possible is the key to a strong economy. In a new paper for the Bennett Jones legal firm, where he is now a senior adviser, Dodge says now is not the time to slash and burn to get to a balanced budget.

On the commodity markets, the July crude contract on the New York Mercantile Exchanged gained four cents to US$104.41 a barrel.

August bullion climbed $3 to US$1,263 an ounce and July copper gained about a penny to $3.03.6 a pound.