Source: The Canadian Press
The Toronto stock market appeared heading for a flat open with investor attention firmly fixed on an afternoon announcement from the U.S. Federal Reserve on another round of stimulus aimed at a faltering American economy.
The Canadian dollar moved higher and the U.S. currency was little changed after the Republicans won control of the House of Representatives while the Democrats retained control of the Senate.
The loonie was up 0.3 of a cent to 99.36 cents US.
U.S. futures were slightly higher ahead of the Fed announcement, scheduled for 2:15 p.m. EDT.
The Dow Jones industrial futures rose 12 points to 11,164, the Nasdaq futures gained 0.75 of a point to 2,151 while the S&P 500 futures were ahead a point to 1,194.
The U.S. central bank is expected to announce the details of its plan to stimulate the economy by buying bonds. The plan, known as quantitative easing, makes stocks a more attractive investment by lowering bond yields.
Investors have been anticipating that the central bank’s program will total at least US$500 billion. Any number significantly higher or lower than that figure could affect stock prices.
U.S. and Canadian markets have made solid advances since the Fed began hinting in late August that it would undertake the bond buying program by the end of the year. Over the last month, the Dow Jones industrial average is up 3.3%, while the main TSX index has risen about 2.5%.
The TSX could find support from the energy sector Wednesday as oil prices rose for a third day, up $1.11 to US$85.01 a barrel. Prices have been lifted this week by better than expected Chinese and U.S. manufacturing data, which raised hopes for higher demand.
Prices have also been supported by a weaker U.S. dollar and anticipation of the Fed stimulus program. The latest round of quantitative easing could further weaken the dollar, depending on the amount of money the policymakers decide to put into the economy and the timeframe in which the buying would occur. Since commodities like oil and gold are priced in U.S. dollars, a weaker greenback makes them more attractive to buyers who use foreign currencies.
Copper prices on the Nymex were unchanged while the December bullion contract gained $6.30 to US$1,363.20 an ounce.
In China, shares fell amid renewed signs that authorities may take further action to curb inflation. The benchmark Shanghai Composite Index lost 0.5%.
In a quarterly report issued late Tuesday, China’s central bank signalled it is likely to pull back further from stimulus policies meant to counter the fallout from the global financial crisis.
Among Asian shares closing higher was Hong Kong’s Hang Seng index, which climbed 2%, South Korea’s Kospi rose 1% and Australia’s S&P/ASX 200 climbed 0.5%.
London’s FTSE 100 index edged up 0.19%, Frankfurt’s DAX was up 0.26% and the Paris CAC 40 was ahead 0.53%.
In earnings, Canadian pipeline operator Enbridge Inc. (TSX:ENB) says its third-quarter net income weakened to $157 million from $304 million a year ago as it dealt with two pipeline leaks in the U.S. Midwest and clean-up associated with the spills. Earnings came in at 42 cents a share, five cents less than expected.
Agrium Inc. (TSX:AGU), a major fertilizer, chemicals and farm inputs retailer, reports its net profits more than doubled to US$57 million in the latest quarter. Revenues for the quarter rose to more than $2 billion from $1.8 billion.
Meanwhile, a decision is expected Wednesday from Industry Minister Tony Clement on whether BHP Billiton can proceed with its hostile, US$38.6 billion bid for Potash Corp. of Saskatchewan (TSX:POT). Clement must rule if the takeover would be a net benefit to the country or not. The announcement will likely come after the markets close.
Pharmaceutical company QLT Inc. (TSX:QLT) has lowered its 2010 revenue target by about 12% compared with its previous guidance. The revised outlook reflected a lower sales forecast for Visudyune, a treatment for age-related blindness.
Wednesday outlook: Stock markets head for weak open
Investors focus on Fed stimulus announcement
- By: Malcolm Morrison
- November 3, 2010 November 3, 2010
- 07:30