News Column

Toronto stock market set to open lower; gold heads up while oil down

July 10, 2014

The Canadian Press

The Toronto stock market looked set to open lower on Thursday amid news that the U.S. Federal Reserve and the Bank of England are keeping interest rates low, and disappointing economic data from China.

The Canadian dollar was down 0.11 of a cent to 93.70 cents US. The loonie could get a lift on Friday when Statistics Canada releases the number of jobs created in June. The federal agency is expected to repoert that about 24,000 jobs were created in June, compared with 25,800 in May.

In London, the Bank of England has kept interest rates steady at a record low of 0.5 per cent and refrained from pumping more money into the economy even as the recovery gathers strength. Thursday's decision was widely expected, even after Bank of England Governor Mark Carney startled analysts last month when he said that an interest rate rise could happen more quickly than markets expected.

The latest meeting of the Federal Reserve on Wednesday indicated that the U.S. central bank plans to end its massive bond buyback program in October and remains in no hurry to raise interest rates.

U.S. futures were deep in the red with the Dow Jones Industrial futures down 141 points to 16,985.61, while the Nasdaq futures lost 34.70 points to 3,892.91 and the S&P 500 dropped 17.25 points to 1,972.83.

Company earnings are expected to be the biggest driver in markets over the coming weeks as investors look for signs that the strengthening in both the Canadian and U.S. economies has translated into higher sales and profits. Many Canadian companies will be reporting quarterly earnings this month and into August.

Corus Entertainment (TSX:CJR.B) reported a third-quarter net loss of $30.3 million, or 36 cents per share, compared with a net profit of $89.9 million, or $1.07 per share, in the same quarter last year. Revenues were up 14 per cent to $214 million compared with $187.1 million year-over-year. Excluding items, Corus says it had an adjusted net income of $41.6 million, or 49 cents per share, in the quarter.

Late Wednesday, Montreal-based Cogeco Cable (TSX:CCA) and its parent company Cogeco Inc. (TSX:CGO) reported higher revenue, but lower profits for the third quarter.

Cogeco cable company said it earned a net profit of $35.5 million, or 73 cents per share, compared with $48.1 million, or 98 cents per share, year-over-year. Revenue was $496.4 million, up from $464.4 million. Revenue beat analysts' estimates but profits were below what was expected. For the parent company, third-quarter profit amounted to $35.6 million, or 69 cents per share, compared to profit of $50.0 million, or $1.03 per share, in the year-ago quarter. Revenue was $536 million, up from $504.4 million.

In global economic news, China has reported a small acceleration in export growth. China's June exports grew 7.2 per cent in dollar terms from a year earlier, up slightly from May's seven per cent growth, according to China's customs office. The growth was a small sign of improvement for the world's No. 2 economy, but there were still concerns about China's uneven recovery.

Meanwhile, oil prices extended losses as the outlook for supply remained robust. Oil has been falling steadily for more than a week partly because worries about disruptions of the oil supply from Iraq have subsided and Libyan oil is returning to the global market. Oil hit a 10-month closing high of $107.26 on June 20.

On the commodity markets, the August crude contract on the New York Mercantile Exchange was down 29 cents to US$102 a barrel.

August bullion was up $17.80 to US$1,342.1 an ounce and September copper was down a penny to US$3.23 a pound.

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Source: Canadian Press DataFile

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