News Column

North American stock markets head for negative session amid economic concerns

May 16, 2014

Malcolm Morrison, The Canadian Press



TORONTO - The Toronto stock market was set for another day of losses Friday because of economic worries.

The Canadian dollar was off 0.02 of a cent at 91.92 cents US.

U.S. futures were also lower ahead of data on housing starts and consumer confidence later in the morning.

The Dow Jones industrial futures dipped nine points to 16,412, the Nasdaq futures lost 2.3 points to 3,561 while the S&P 500 futures were down one point to 1,866.25.

The TSX fell 85 points Thursday, while the Dow tumbled 167 points after data showed the economic recovery in Europe is more fragile than thought while retail giant and economic barometer Wal-Mart Stores delivered a disappointing outlook for the second quarter.

"Financial markets are clearly still skittish from the lack of positive catalysts this week," said BMO Capital Markets senior economist Carl Campus.

Traders will be particularly interested in the University of Michigan's consumer sentiment index in light of the Wal-Mart report. Economists expect the index rose to 85 in mid-May, which would be the highest reading since July, from 84.1 in April.

Economists also expect U.S. housing starts to come in at a seasonally adjusted annual rate of 980,000, which would be the fastest growth since December, up from 946,000 in March.

This has also been a remarkable week in the fixed income area where bond yields have fallen sharply amid equity market nervousness.

The benchmark U.S. 10-year Treasury bond was at 2.5 per cent, after starting the week at 2.66 per cent and as low as 2.47 per cent on Thursday.

And the rally hasn't been confined to the U.S.

In Canada, intraday yields on 10-year Government of Canada bonds touched 2.22 per cent Thursday after sitting as high as 2.4 per cent earlier in the week.

In earnings news, auto parts maker Martinrea International Inc. (TSX:MRE) reported quarterly net income of $16.7 million or 20 cents per share, down from $19.9 million or 24 cents per share in the same 2013 period. Revenue for the three months was up 12.4 per cent from $769.1 million in the same prior-year period.

And private equity firm Onex Corp. (TSX:OCX) reported a first-quarter consolidated net profit of $99 million, up from a net loss of $271 million in the same quarter last year. Revenues were up three per cent to $6.5 billion from $6.325 billion year-over-year. Onex says it’s increasing its quarterly dividend 33 per cent to five cents, up from 3.75 cents.

On the commodity markets, June crude gained 23 cents to US$101.73 a barrel.

July copper was unchanged at US$3.15 a pound while June bullion edged 50 cents higher to US$1,294.10 an ounce.

There was also major merger and acquisition activity Friday morning as restaurant chain Red Lobster is to be sold to investment firm Golden Gate Capital for US$2.1 billion.

In other corporate developments, Germany’s economy minister says Google may have such a dominant market position that a breakup of the company “must be seriously considered.” Sigmar Gabriel’s comment in an op-ed for a German daily comes a day after 400 companies submitted a competition complaint against U.S-.based Google to the European Commission.


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Source: Canadian Press DataFile


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