Toronto stock market to open positive, traders optimistic about debt deal | iNFOnews | Thompson-Okanagan's News Source

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Toronto stock market to open positive, traders optimistic about debt deal

October 16, 2013 - 5:36 AM

TORONTO - The Toronto stock market was on the way to a slightly higher start to the session Wednesday with traders confident that Republicans and Democrats will arrive at a last-minute deal to avoid hitting the U.S. debt limit.

Stock SNC-Lavalin Inc. (TSX:SNC) will be in focus on the TSX after the engineering company said it now expects consolidated net income in fiscal 2013 to be in the range of $10 million to $50 million, sharply lower than earlier guidance in the range of $220 million to $235 million.

Among other things, it blamed a number of money-losing legacy contracts and a $75-million charge related to a restructuring of its European operations.

The Canadian dollar rose 0.11 of a cent to 96.45 cents US just hours before the debt limit is reached, at which point Washington will lose its ability to borrow and will be required to meet its obligations by relying on cash in hand and incoming tax receipts.

U.S. futures were positive as traders also considered earnings from toymaker Mattel, Bank of America and PepsiCo.

The Dow Jones industrial futures gained 60 points to 15,155, the Nasdaq futures were ahead 7.75 points to 3,248.5 and the S&P 500 futures added six points to 1,688.

Democrat Senate Majority Leader Harry Reid and Republican Minority Leader Mitch McConnell were hoping to come to an agreement later Wednesday to raise the debt ceiling and end a partial government shutdown and, if possible, hold votes later in the day.

Negotiations between the two Senate leaders resumed after House of Representatives Speaker John Boehner tried to write legislation that would satisfy GOP lawmakers, especially conservatives. He crafted two versions of the bill, but neither made it to a House vote because both faced certain defeat.

Boehner’s inability to produce a bill that could pass his own chamber likely means he will have to let the House vote on a Senate compromise, even if that means it would pass with strong Democratic and weak GOP support.

Threats of a downgrade to U.S. debt also provided added incentive to get a deal done.

Ratings agency Fitch warned after the close Tuesday that it was reviewing the government’s AAA credit rating for a possible downgrade, though no action was near. The firm, one of the three leading U.S. credit-ratings agencies, said that “the political brinkmanship and reduced financing flexibility could increase the risk of a U.S. default.”

It was a heavy earnings day in the U.S. and PepsiCo posted earnings of US$1.91 billion, or $1.23 per share. That compares with $1.9 billion, or $1.21 per share, a year ago.

Not including one-time items, the company said it earned $1.24 per share, seven cents better than analysts’ forecasts and its shares were largely unchanged in pre-market trading.

Revenue rose two per cent to $16.91 billion, less than the $17.02 billion Wall Street expected. The company stood by its full-year earnings forecast.

Bank of America Corp. earned $2.5 billion or 20 cents a share in the July-September period, up from $340 million a year earlier and beating the 19 cents expected by financial analysts. Third-quarter revenue slipped to $22.2 billion from $22.5 billion, coming in close to the analysts’ forecast of $22 billion and its shares ticked up 0.07 per cent in pre-market trading.

Mattel’s third-quarter net income rose 16 per cent to $422.8 million, or $1.21 per share. That was up from $365.9 million, or $1.04 per share, in the prior-year period, buoyed by higher sales of American Girl and Monster High products and strength in all regions. Its performance beat Wall Street expectations and its shares ran ahead almost six per cent in pre-market trading.

Commodities were mixed with the November crude contract on the New York Mercantile Exchange off eight cents at US$101.13 a barrel after closing Tuesday at its lowest level since early July.

December copper on the Nymex dropped four cents to US$3.27 a pound while December gold bullion in New York gained $5.30 to US$1,278.50 an ounce.

European bourses were negative with London's FTSE 100 index down 0.47 per cent, Frankfurt's DAX 0.15 per cent lower and the Paris CAC 40 off 0.8 per cent.

Earlier in Asia, Japan’s Nikkei 225 rose 0.2 per cent, Hong Kong’s Hang Seng dropped 0.5 per cent, China’s Shanghai Composite fell 1.8 per cent and Australia’s S&P/ASX 200 added 0.1 per cent.

News from © The Canadian Press, 2013
The Canadian Press

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