The fading name on the building in Toronto that used to house the Toronto Stock Exchange is pictured on August 18 2011. THE CANADIAN PRESS/Aaron Vincent Elkaim
January 28, 2014 - 5:21 AM
TORONTO - The Toronto stock market headed for a strong open Tuesday as emerging market worries receded and traders looked to a mixed bag of earnings reports and a major deal in the financial sector.
Bank of Montreal (TSX:BMO) is offering to buy U.K.-based investment manager F&C Asset Management PLC in a cash deal valued at $1.3 billion. The bank is offering 120 British pence for each share, which is about 28 per cent above F&C'ss closing price last Friday before news of the talks became public. The friendly deal is being supported by the company’s board but will require shareholder and other approvals.
The Canadian dollar was slightly lower after closing at a 4 1/2 low on Monday, down 0.14 of a cent to 89.85 cents US.
U.S. futures were mixed with the Dow Jones industrial futures up 69 points to 15,856 amid strong results from Ford and chemical maker DuPont. But the Nasdaq slid 9.5 points to 3,493.5, reflecting investor disappointment with earnings from Apple. The S&P 500 futures rose seven points to 1,782.75.
Markets have been severely buffetted over the last few sessions on concerns about emerging markets, including slowing growth in China, the world’s second biggest economy.
But markets were reassured after a high-profile financial company China Credit Trust trust cut a last minute deal to avoid a default. The deal avoided the first of what was feared would be a cascade of defaults in the country’s shadow banking sector.
Markets have also been jittery because of currency turmoil involving countries such as the Turkish lira, the Russian ruble and the Indian rupee as investors wonder how the Federal Reserve's policy to reduce its monetary stimulus impacts on them.
The Fed’s massive bond purchases over the last few years has resulted in a stream of cheap money into those markets. But now the central bank is cutting back on those asset purchases.
The Fed makes its next interest rate announcement Wednesday and markets widely expect it to further pare its bond purchases by another US$10 billion a month to $65 billion.
At the same time, analysts have suggested that North American stock markets were vulnerable to a correction after Fed easing helped underpin a strong rally on many equity markets last year that left the S&P 500 alone up about 30 per cent for 2013.
In earnings news, automaker Ford earned $3 billion, or 74 cents per share, in the final quarter of 2013, but that was largely because of a one-time tax gain. Excluding the gain, net income was 31 cents per share, topping analysts’ forecast of 27 cents. Fourth-quarter revenue rose 3.5 per cent to $37.6 billion and its shares were up 2.5 per cent in pre-market trading in New York.
The DuPont Co. on Tuesday reported quarterly earnings of $185 million, or 20 cents per share, up from $92 million, or 9 cents per share a year ago. DuPont’s adjusted earnings of 59 cents per share beat the 55 cents per share consensus of Wall Street analysts and its shares gained 1.75 per cent ahead of the open.
But Apple shares tumbled more than seven per cent in pre-market trading after posting earnings of $13.07 billion, or $14.50 per share, in the quarter, compared to $13.08 billion, or $13.81 per share, in the prior year. Revenue rose six per cent to $57.6 billion.
Analysts had expected Apple to earn $14.09 per share on revenue of $57.5 billion.
Apple also hit quarterly highs for the sales of its most popular products but investors had higher hopes after Apple stoked consumer demand by unveiling new versions of its iPhone and iPad in time for the holidays.
On the commodity markets, oil prices started to recover after two days of steep losses with the March crude contract on the New York Mercantile Exchange up 57 cents to US$96.29 a barrel
March copper on the Nymex gained a cent to US$3.27 a pound while February bullion declined $7.50 to US$1,255.90 an ounce.
European bourses were in positive territory as London's FTSE 100 index advanced 0.29 per cent, Frankfurt's DAX rose 0.36 per cent while the Paris CAC 40 was up 0.5 per cent.
Earlier in Asia, Japan’s Nikkei 225 fell 0.2 per cent while South Korea’s Kospi edged up 0.3 per cent, Hong Kong’s Hang Seng lost 0.1 per cent and the Shanghai Composite Index in mainland China rose 0.3 per cent.
Australia’s S&P/ASX 200 fell 1.3 per cent as investors had an opportunity to catch up with global declines following a public holiday there.
News from © The Canadian Press, 2014