TSX heads for weak open, traders look to data, Sobeys to shut 50 stores

TORONTO – The Toronto stock market appeared headed for a slightly lower open, while U.S. consumer spending and inflation data could set the tone for early trading.

The Canadian dollar rose 0.07 of a cent to 93.34 cents US.

U.S. futures were little changed with the Dow Jones industrial futures off four points to 16,767, the Nasdaq futures were down 1.3 points to 3,813.5, and the S&P 500 futures were 0.9 of a point lower to 1,948.5.

On the corporate front, grocer Sobey’s plans to close about 50 of its underperforming stories. Sobey’s parent Empire Inc. (TSX:EMP.A) made that announcement as it also posted fourth-quarter adjusted net earnings from continuing operations of $131.3 million, or $1.42 per diluted share, beating estimates of $1.29. That compared with $95.7 million, or $1.40 per diluted share, in the same quarter of last year. Sales were $5.94 billion, up $1.68 billion year-over-year, excluding the impact of the recent Canada Safeway acquisition and narrowly missing expectations of $5.95 billion. It also upped its dividend 3.8 per cent to 27 cents a share.

Also, media giant Shaw Communications (TSX:SJR.B) reported quarterly earnings per share of 47 cents, two cents less than estimates.

It is expected that inflation in the U.S. rose at an annualized pace of 1.8 per cent, a one-and-a-half year high.

Meanwhile, personal income and spending are both expected to rise 0.4 per cent in May.

BMO Capital Markets noted that “at this point, consumer spending looks poised to post another quarter of solid three per cent in the second quarter, which would support a broader rebound in the U.S. economy.”

That is just the sort of showing investors are looking at after data released Wednesday showed that the final revision to American economic growth in the first quarter showed that U.S. gross domestic product shrank 2.9 per cent, larger than the two per cent contraction economists had expected. However, the decline was due in large part to severe winter weather and the damage to the economy was expected to be short-lived.

Traders took the growth data in stride and both the TSX and New York indexes racked up gains Wednesday. However, gains in Toronto were muted as the base metals sector continued to lose ground. The group is down more than six per cent this month.

In other corporate news, Alcoa buying British jet engine component company Firth Rixson for US$2.35 billion in cash and $500 million stock. Alcoa is increasing its focus on finished aluminum products for aerospace, autos and other industries. Those segments account for more than half of the company’s revenue and three-quarters of its after-tax operating income.

Ikea’s U.S. division is raising the minimum wage for thousands of its retail workers, pegging it to the cost of living in each location, instead of its competition. The 17 per cent average raise, expected to be announced Thursday, is the Swedish ready-to-assemble furniture chain’s biggest in 10 years in the U.S. It will translate to an average wage of $10.76 an hour.

Oil prices were lower as fears diminished somewhat over supply disruptions from Iraq with the August contract down 22 cents to US$106.28 a barrel.

Metals also declined with July copper down a cent to US$3.16 a pound, while August bullion faded $13.60 to US$1,309 an ounce.