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TSX set to head higher after steep losses triggered by Chinese economic data

Toronto's financial district is shrouded by fog on December 30, 2011. THE CANADIAN PRESS/Frank Gunn
April 16, 2013 - 5:23 AM

TORONTO - The Toronto stock market appeared set to open higher Tuesday, likely to claw back some of the steep losses from the previous session as commodity prices stabilized.

The Canadian dollar gained 0.28 of a cent to 97.8 cents US after falling more than a cent on Monday.

The TSX registered its biggest one-day tumble since last June and the lowest close since mid-November, plunging 333 points in the wake of disappointing Chinese growth data, which squeezed energy and base metal stocks as oil and copper sold off.

The TSX was also heavily pressured by gold prices, which fell US$140 an ounce to their lowest level in more than two years amid fears that European governments may sell the precious metal as part of their debt-fighting measures.

The showing left the TSX down 3.45 per cent year to date.

Investors were also spooked by explosions late in the afternoon at the finish line of the Boston marathon, which killed three people and served as a reminder of the threats posed by terrorists to a fragile global economic recovery.

U.S. futures were also positive after New York indexes sustained their biggest drops of 2013 as investors looked to solid earnings reports from investment bank Goldman Sachs and Coca Cola.

The Dow Jones industrial futures gained 95 points to 14,607 after the blue chip index plunged 266 points Monday, derailing a rally that has gone on practically non-stop all year.

The Nasdaq futures were ahead 23.2 points to 2,806.8 following a 78-point drop while the S&P 500 futures advanced 11 points to 1,554.5 after losing 36 points.

Oil prices continued to falter amid concerns over the global economic recovery as the May crude contract on the New York Mercantile Exchange slipped 11 cents to US$88.60 a barrel.

The June bullion contract on the Nymex was up $25.60 to US$1,386.70 an ounce. Prices were also pressured Monday by Goldman Sachs lowering its average gold-price forecast for 2013.

Also, some U.S. Federal Reserve officials have also been calling for an early end to the central bank’s bond-buying program. If that happens, it would likely cause U.S. interest rates to rise, resulting in an appreciation of the U.S. dollar. That gives traders another reason to sell gold, since they see the metal as an alternative to holding dollars.

And May copper in New York was up a cent to US$3.28 a pound after data showing that growth in China, the world’s second-largest economy, slowed to 7.7 per cent in the first quarter from 7.9 per cent in the final quarter of last year. Growth had been expected to accelerate slightly to eight per cent.

China has been the world's biggest purchaser of copper, which is viewed as an economic bellwether because it is used in so many applications.

On the earnings front, Goldman Sachs reported first-quarter results that beat analysts’ forecasts thanks to a pickup in stock and bond underwriting. The bank earned $2.2 billion or $4.29 a share in the first quarter, up five per cent from a year ago, and beating estimates by 39 cents. Its stock was ahead 0.57 per cent.

Coca-Cola Co.’s first-quarter results also came in above expectations as the world’s biggest beverage maker saw global sales volume grow. It earned $1.75 billion, or 39 cents per share, down from $2.1 billion, or 45 cents per share, a year earlier. Ex-items, Coca-Cola earned 46 cents per share, beating estimates by one cent.

Its stock was up three per cent in pre-market trading even as it missed on revenue of $11.04 billion.

European bourses were negative as a German index of economic optimism fell more than expected as new troubles in the eurozone debt crisis dented recent optimism.

The ZEW institute’s survey fell to 36.3 from 48.5 in March. Market analysts had expected a reading of 44.0.

London's FTSE 100 index stepped back 0.36 per cent, Frankfurt's DAX was down 0.21 per cent while the Paris CAC 40 edged 0.16 per cent lower.

In Asia, Japan’s Nikkei fell 0.4 per cent, Hong Kong’s Hang Seng lost 0.5 per cent, South Korea’s Kospi ended 0.1 per cent higher, and Australia’s S&P/ASX 200 shed 0.3 per cent.

News from © The Canadian Press, 2013
The Canadian Press

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