A shovel and a jackhammer stand near the European Central Bank in Frankfurt, Germany, March 7, 2012. THE CANADIAN PRESS/AP, Michael Probst
July 27, 2012 - 8:16 AM
TORONTO - The Toronto stock market headed for a positive start to trading Friday with buying sentiment underpinned by the latest round of optimism that the eurozone debt crisis is under control.
Markets had rallied strongly Thursday after the European Central Bank president pledged to do whatever it takes to save the euro currency union.
ECB President Mario Draghi suggested Thursday that the central bank could intervene in markets to lower the borrowing rates of financially weak countries like Spain.
The Canadian dollar rose 0.16 of a cent to 99.21 cents US amid rising prices for oil and metals.
New York futures were positive as traders awaited the release of the first look at second-quarter economic growth. Economists expect U.S. gross domestic product to have grown at an annualized rate of 1.4 per cent during the quarter, down from 1.9 per cent in the first quarter, amid lower consumer spending and belt-tightening by governments.
The Dow Jones industrial futures gained 42 points to 12,867, the Nasdaq futures were ahead 11.5 points to 2,584 and the S&P 500 futures climbed five points to 1,359.8.
Stocks have been depressed in recent weeks as the focus of the European government debt crisis moved to Spain. Traders skeptical over the government's ability to manage high debt levels have driven up bond yields past the seven per cent level, which is considered unsustainable in the long run.
Draghi suggested that the ECB considers it part of its job to keep government borrowing rates at normal levels. It could do so by buying government bonds, which has the effect of lowering their yield, or interest rate.
Spain's 10-year yield and Italy 10-year yields are lower despite the Bundesbank comments, down 12 basis points to 6.80%
IG Markets strategist Stan Shamu said hopes for ECB action will remain elevated ahead of its scheduled Aug. 2 monetary policy meeting.
Commodity prices advances with the September crude contract on the New York Mercantile Exchange ahead 25 cents to US$89.64 a barrel.
September copper ran ahead four cents to US$3.43 a pound while August gold gained $10.90 to US$1,626 an ounce.
On the earnings front, Eldorado Gold (TSX:ELD) reported quarterly net income of $46.6 million or seven cents share. That is down 38 per cent from a year ago as the miner cited lower earnings before taxes from gold mining operations, and higher general, administrative, exploration and tax expenses.
Revenues from gold sales for the quarter came in at $214.2 million, down 13 per cent from a year earlier due to lower sales volumes partially offset by higher prices.
Eldorado also revised its 2012 production guidance downward to 660,000 ounces of gold.
TMX Group (TSX:X), which runs the Toronto stock exchange, rang up net income of $1.8 million in the second quarter, or two cents per share, compared to net income of $54.7 million, or 73 cents a share, in the same period a year ago. Revenue in the quarter totalled $167.5 million, down slightly from $169.3 million in the year-before quarter. Analysts on average, had been expecting $161 million in revenue, according to Thomson Analytics.
Corporate earnings figures in Europe were mostly upbeat. Shares rose in Barclays bank of the U.K., French oil company Total, EADS, the owner of plane maker Airbus, and carmaker Renault after they reported earnings.
European bourses advanced with London's FTSE 100 index up 0.13 per cent, Frankfurt's DAX added 0.13 per cent and the Paris CAC 40 climbed one per cent.
Asian markets also got a boost from Samsung’s record-high quarterly profit. Customers flocked to Galaxy smartphones, in the April-June quarter helping it outdo rivals even at a challenging time for the global tech industry. Samsung Electronics vaulted 5.2 per cent in Seoul.
Japan’s Nikkei 225 stock average closed up 1.5 per cent, Hong Kong’s Hang Seng added two per cent, Australia’s S&P/ASX 200 rose 1.5 per cent, South Korea’s Kospi climbed 2.6 per cent and the Shanghai Composite inched up 0.1 per cent.
News from © The Canadian Press, 2012