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Toronto stock market to open positive, World Bank sees global economy picking up

A man walks past a building in Toronto that used to house the Toronto Stock Exchange on August 18 2011. THE CANADIAN PRESS/Aaron Vincent Elkaim
January 15, 2014 - 5:37 AM

TORONTO - The Toronto stock market could be in for a slightly higher open Wednesday in the wake of a positive forecast on the global economy and higher oil pirces.

The Canadian dollar drifted 0.11 of a cent lower to 91.32 cents US, its lowest level since early September 2009.

U.S. futures were higher amid a strong earnings report from Bank of America.

The Dow Jones industrial futures gained 39 points to 16,338, the Nasdaq futures were ahead 12.7 points to 3,586.5 and the S&P 500 futures were up 3.5 points to 1,836.5.

Bank of America, the second-largest U.S. bank, earned US$3.44 billion or 29 cents a share in the October to December period, up from $732 million a year earlier. The showing beat forecasts by two cents amid a big improvement in loan loss provisions.

Fourth-quarter revenue rose to $22.32 billion from $19.6 billion, exceeding analysts’ forecasts of $21.2 billion and its shares were up two per cent in pre-market trading.

Traders also took in data from the World Bank showing the global economy is slowly picking up steam.

The bank’s twice-yearly Global Economics Prospects report says global growth is expected to firm from 2.4 per cent in 2013 to 3.2 per cent this year and 3.4 per cent in 2015. The report said the momentum that countries such as the United States and Japan are building up should support stronger growth in the developing countries.

Traders also awaited the afternoon release of the latest take on the economy by the U.S. Federal Reserve. The Fed has already started to taper its massive monthly bond purchases to $75 billion a month, down from $85 billion, but has said further tapering will depend on economic performance, particularly jobs data.

Uncertainty about Fed intentions arose after December jobs data released last Friday came far below expectations.

Corporate earnings are the other big issue for markets as fourth quarter data starts to come in. Earnings are the The S&P 500 rocketed about 30 per cent last year, helped in large measure by Fed stimulus. Investors now want to see if strong earnings and revenue can justify that gain and push stock prices higher.

On the commodity markets, February crude on the New York Mercantile Exchange gained 36 cents to US$92.95 a barrel.

March copper declined one cent to US$3.32 to US$ a pound while February bullion lost $7.50 to US$1,237.90 an ounce.

In other corporate news, Magna International Inc. (TSX:MG) is forecasting between US$33.8 billion and US$35.5 billion of total sales this year, with about half of that generated from North America. The Canadian auto parts giant, which operates 316 factories in countries around the world, is also predicting that it will spend about US$1.4 billion on capital projects.

General Motors Co. will resume paying a quarterly dividend for the first time in nearly six years. The new 30-cent dividend is payable in March. GM hasn’t paid a dividend since June 2008, when it suspended its 25-cent dividend as it spiralled into debt and eventual bankruptcy.

Encana Corp.’s (TSX:ECA) chief financial officer says the company may decide to get rid of its Deep Panuke offshore natural gas project in Nova Scotia. Sherri Brillon says that the project doesn’t fit with Encana’s new strategy, which involves focusing on five core regions in Canada and the United States instead of investing in dozens of different areas.

Sirius XM Canada Holdings Inc. (TSX:XSR), parent of satellite radio broadcaster Sirius XM Canada Inc., posted record first-quarter revenue of $76.4 million, up 11 per cent from a year ago. Quarterly net profit rose 7.3 per cent to $3.5 million.

European bourses advanced as London's FTSE 100 gained 0.4 per cent, Frankfurt's DAX climbed 1.3 per cent and the Paris CAC 40 rose 0.7 per cent.

Japan’s Nikkei 225 climbed 2.5 per cent, recovering much of its 3.1 per cent loss on Tuesday as the Japanese yen weakened relative to the dollar, boosting exporters such as Toyota and Sony. Hong Kong’s Hang Seng rose 0.5 per cent, South Korea’s Kospi added 0.4 per cent while the Shanghai Composite Index lost 0.2 per cent.

News from © The Canadian Press, 2014
The Canadian Press

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