News Column

Stock markets to head higher as U.S. economy rebounds strongly in second quarter

July 30, 2014

Malcolm Morrison, The Canadian Press



TORONTO - The Toronto stock market was set to head higher amid data showing much stronger than expected U.S. economic growth.

Gross domestic product grew a much better than expected four per cent after contracting in the January-March period because of severe winter weather. That contraction was revised lower to 2.1 per cent from 2.9 per cent.

The Canadian dollar was off 0.04 of a cent to 92.05 cents US a day before Statistics Canada releases economic growth figures for May.

U.S. futures were higher with the Dow Jones industrial futures up 77 points to 16,922, the Nasdaq futures gained 26 points to 3,978.3 and the S&P 500 futures ran up 10.5 points to 1,973.5.

Traders also took in some positive employment news two days before the release of the American government's employment report for July. Payroll firm ADP reported that 218,000 jobs were created in the private sector during the month. Analysts looked for the U.S. government report to show that about 230,000 jobs were created during July.

Meanwhile, the U.S. Federal Reserve makes its scheduled announcement on interest rates (at 2 p.m. EDT).

Traders will look for any hint that the central bank could start to hike rates sooner than anticipated. Markets generally expect the Fed to start hiking rates away from near zero in mid-2015.

The Fed is also expected to further reduce the monthly pace of its bond purchases by another $10 billion to $25 billion, and signal that it intends to end its latest round of quantitative easing in October.

Meanwhile, it's an extremely busy day for earnings on the TSX, particularly from the energy and mining sectors.

Cenovus Energy Inc. (TSX:CVE) more than tripled its second-quarter net earnings to $615 million, or 81 cents per share. The showing was partly due to an almost doubling of operating earnings. Cash flow was almost $1.2 billion versus $871 million year-over-year as Cenovus benefited from increased oil production and higher commodity prices.

Suncor Energy (TSX:SU) reports later today (at 8 p.m. EDT).

Meanwhile, Information technology services company CGI Inc. (TSX:GIB.A) posted third-quarter net earnings of $225.1 million, or 71 cents per share, up 26 per cent. That compares with $178.2 million, or 56 cents per share diluted, in the same quarter of 2013. Revenue was up 3.9 per cent to $2.7 billion.

And media company Torstar Corp. (TSX:TS.B) reported net income of $19.7 million or 25 cents per share, compared with $18. million, or 23 cents per share a year ago. Total segmented revenue was down 7.1 per cent to $237.3 million.

Investors will also hear from gold miners Barrick Gold (TSX:ABX), Yamana Gold (TSX:YRI) and Agnico Eagle Mines (TSX:AEM) after the close. Base metal miners HudBay Minerals (TSX:HBM) and Sherritt International (TSX:S) also report after markets close.

On the commodity markets, September crude gained 54 cents to US$101.51.

September copper was unchanged at US$3.22 a pound, while August bullion was off 20 cents to US$1,298.10 an ounce.

Meanwhile, traders tried to assess the effect of the latest round of sanctions against Russia. The TSX closed flat Tuesday while New York registered losses after the U.S. and the European Union announced expanded sanctions in response to the recent downing of a Malaysian airliner over an area of Ukraine controlled by pro-Russian separatists.


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Source: Canadian Press DataFile


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