Toronto stock market to open little changed, traders look to U.S. jobs data

TORONTO – The Toronto stock market looked set to open little changed Thursday with investors cautious ahead of Friday’s release of U.S. employment data for May.

The Canadian dollar was up 0.21 of a cent to 96.87 cents US as traders also looked to the release of jobs numbers in Canada on Friday. Economists expect around 20,000 jobs were created last month.

U.S. futures were higher with the Dow Jones industrial futures up 37 points to 14,996, the Nasdaq futures gained 5.75 points to 2,944.25 and the S&P futures were ahead 5.4 points to 1,613.4.

Stock markets in Toronto and New York sold off Wednesday in the wake of a couple of disappointing readings on American employment with the TSX shedding 150 points — its fourth losing session in a row — and the Dow tumbling 217 points.

Economists have been forecasting that the American economy cranked out a total of 165,000 jobs last month. But that modest figure was called into doubt after payroll firm ADP reported that the U.S. private sector cranked out 135,000 jobs during May, less than the 165,000 that had been expected.

Also, the latest reading on the health of the U.S. service sector showed rising expansion but the data also showed that hiring slowed further in May to the lowest level since last July.

Traders hope to get a better idea of the job market before the market open with the release of the latest data on applications for jobless benefits, a key gauge of layoff activity.

But Wednesday’s slide was just the latest jolt of volatility over the last couple of weeks after Fed Chairman Ben Bernanke said May 22 that the Fed may decide to taper its bond purchase program within its next few policy meetings if the U.S. economy gains steam.

That program, involving the purchase of US$85 billion in bonds each month, has not only kept interest rates low, it has also helped fuel a huge rally on U.S. markets, leaving the Dow industrials ahead about 14 per cent for the year.

The resource-heavy TSX is barely even with where it started the year as mining stocks in particular have been pummelled by a slow global economic rebound and lower demand for commodities.

Commodities were mixed Thursday with July crude on the New York Mercantile Exchange ahead 52 cents to US$94.26 a barrel.

Prices advanced on Wednesday after the Energy Department said U.S. crude oil inventories shrank by 6.3 million barrels last week, much bigger than the one million drop that had been expected.

July copper stepped back four cents to US$3.33 a pound while August bullion gained $4.50 to US$1,403 an ounce.

European bourses were higher as the European Central Bank announced it was leaving its key rate unchanged at 0.5 per cent.

London’s FTSE 100 index edged up 0.16 per cent as The Bank of England also left its key rate unchanged and opted not to pump more money into the British economy.

The bank has pumped 375 billion pounds into Britain’s economy since 2009 in a stimulus plan known as quantitative easing, in which the government buys bonds from financial institutions, hoping they will lend.

Frankfurt’s DAX rose 0.3 per cent and the Paris CAC 40 gained 0.54 per cent.

Trading on a number of European exchanges started about an hour late Thursday after a problem with NYSE Euronext’s systems prevented customers from placing orders. Exchanges in Paris, Lisbon, Brussels and Amsterdam were affected by the unexplained glitch.

Earlier in Asia, markets responded to the weakness experienced the previous day in Europe and the U.S.

The Nikkei closed down 0.9 per cent on top of Wednesday’s 3.8 per cent fall. Hong Kong’s Hang Seng fell 1.1 per cent while Shanghai’s main index dropped 1.3 per cent. Markets in South Korea were closed for a public holiday.

In corporate news, Dominion Diamond Corp. (TSX:DDC) posted a $500.2-million net profit attributable to shareholders in its fiscal first quarter, which included the sale of its Harry Winston luxury jewelry retail business. The profit amounted to $5.89 per share, up from 14 cents per share or $11.6 million a year earlier.