TMX Group tickers zoom across banners in Toronto on May 10, 2013. THE CANADIAN PRESS/Frank Gunn
January 10, 2014 - 5:14 AM
TORONTO - The Toronto stock market looked set for a positive open Friday as traders looked to the release of what is expected to be a strong U.S. employment report which could provide an indication of what the Federal Reserve will do about its key stimulus program.
The Canadian dollar was down 0.09 of a cent to 92.06 cents US as markets also looked to domestic employment data. Statistics Canada is expected to report that the economy cranked out about 14,600 jobs, following a gain of 21,600 the previous month.
U.S. futures were higher ahead of the 8:30 a.m. EST release of the government's non-farm payrolls report. Expectations were ratcheted up after payroll firm ADP reported Wednesday that the private sector alone created 238,000 jobs last month, while other data Thursday showed a continuing decline in those filing for jobless benefits. Economists now expect the economy to have created a total of 200,000 jobs last month, following a 195,000 print the previous month.
The Dow Jones industrial futures ran up 58 points to 16,449, the Nasdaq futures climbed 20 points to 3,567.8 and the S&P 500 futures gained 7.25 points to 1,840.25.
Traders hope that the U.S. jobs data will provide some direction on how the U.S. Federal Reserve plans to proceed on further tapering to its massive monthly bond purchases. The key stimulus program was cut last month from $85 billion a month to $75 billion, making further cuts contingent on economic performance, particularly the job market.
Investor sentiment has been heavily dependent on tapering expectations since the prospect was first raised by outgoing Fed president Ben Bernanke last May. Many traders worried about the prospect of lower stimulus because much of the rally in global stocks over the past few years has been driven by the Fed’s policy, which has kept long-term interest rates at historic lows.
Other recent economic data have painted a picture of a U.S. economy that is steadily improving. Exports hit a record level in November, lowering the U.S. trade deficit. Businesses have ordered more manufactured goods. Auto sales reached a six-year high in 2013.
Analysts now estimate that the economy expanded at a healthy annual rate of three per cent to 3.5 per cent in the October-December quarter, up from earlier forecasts of a rate of two per cent or less.
Commodity prices were also higher ahead of the release of the jobs data with the February crude contract on the New York Mercantile Exchange ahead 88 cents to US$92.84 a barrel.
March copper gained a penny to US$3.31 a pound while February bullion rose $3.10 to US$1,232.50 an ounce.
In earnings news, shares in resource giant Alcoa Inc. fell seven per cent in pre-market trading in New York after it reported a $2.34 billion fourth-quarter loss. The company wrote down the value of years-old aluminum-smelting acquisitions to shift its focus to more profitable businesses.
Ex-items, Alcoa earned four cents a share, two cents below expectations. However, its $5.59 billion in revenue beat the forecast of $5.36 billion from analysts surveyed by FactSet.
Earlier in Asia, Japan’s Nikkei closed with a slight gain of 0.2 per cent, Hong Kong’s Hang Seng rose by 0.3 per cent, South Korea’s Kospi dropped 0.4 per cent and the Shanghai Composite Index shed 0.7 per cent.
European bourses registered solid gains as London's FTSE 100 index climbed 1.09 per cent, Frankfurt's DAX was ahead 0.94 per cent and the Paris CAC 40 advanced 0.87 per cent.
News from © The Canadian Press, 2014