May 26, 2010
Malcolm Morrison
The Toronto stock market looked set for a higher open Wednesday as positive economic data helped raise commodity prices and distract investors from Europe’s debt crisis.
U.S. futures also pointed to gains at the open with the Dow Jones industrial futures ahead 74 points to 10,099, the Nasdaq futures rose 15.25 points to 1,830.75 and the S&P 500 futures advanced 9.6 points to 1,082.6.
The Canadian dollar was up 0.4 of a cent to 93.86 cents US after U.S. dollar strength pushed the currency down almost a cent on Tuesday.
Investor sentiment picked up after the Organization for Economic Cooperation and Development, a watchdog for 31 of the most developed economies, raised its forecasts for economic growth in its member countries _ which include Canada, the United States, Japan, Germany and the United Kingdom.
It expects growth to come in at 2.7 per cent this year, up from its forecast of 1.9 per cent last November. But it added that Japan and the U.S. are still expected to outpace Europe.
There was also a strong note of caution in Wednesday’s report.
The OECD said that serious risks including Europe’s sovereign debt crisis and a possible boom-bust scenario in emerging markets such as Brazil, India and China still threaten what it calls a “relatively auspicious” economic environment.
The July crude contract on the New York Mercantile Exchange rose $2.04 to US$70.79 following the report.
The June gold contract on the Nymex rose $15 to US$1,213 an ounce while July copper rose six cents to US$3.11 a pound.
Investors were already sniffing around for bargains after global markets fell back sharply over the last month because of fears that the European debt crisis could worsen and potentially derail a global economic rebound.
North American markets came back from sharp triple digit losses early in Tuesday's session to close little changed.
But the TSX and the Dow industrials fell four per cent just last week. The Toronto market is down over six per cent from its 2010 high posted on April 26.
The TSX should also get support from the financial sector after Bank of Montreal (TSX:BMO) handed in quarterly earnings that beat expectations.
The bank reported quarterly earnings doubled from a year ago to $745-million.
That came out to $1.26 per share of net earnings, or $1.28 per share of cash earnings _ 18 cents per share ahead of analyst estimates in both cases.
Provisions for credit losses during the quarter were reduced by $123 million from a year ago to $249 million for the three months ended April 30.
World stock markets rebounded Wednesday following steep losses the previous day when investors feared the repercussions of painful austerity measures on Europe’s economic growth and the knock-on impact on trading partners like the U.S. and Japan.
The forced merger of a troubled savings bank in Spain has raised the fear of wider troubles in the banking sector and a freeze in credit markets like the one that accompanied the financial crisis in 2007 and 2008.
In Asia, Japan’s benchmark Nikkei 225 stock average closed 0.7 per cent higher after tumbling 3.1 per cent to a six-month low Tuesday.
South Korea’s Kospi index gained 1.4 per cent to 1,582.12 while Australia’s S&P/ASX 200 index was up one per cent. Hong Kong’s Hang Seng index rose 1.1 per cent.
London's FTSE 100 index climbed 2.12 per cent, Frankfurt's DAX gained 1.9 per cent while the Paris CAC 40 was ahead 2.9 per cent.
In other corporate news, Fortress Energy Inc. (TSX:FEI) axed its annual meeting, making an official public announcement just hours before it was set to begin Tuesday. The company said that the meeting was being postponed while its board of directors reviews strategic alternatives. It plans to reschedule the meeting before the end of June.
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