TSX set to advance

The Canadian dollar rose 0.25 of a cent to 98.59 cents US.

U.S. futures were positive with the Dow Jones industrial futures up 52 points to 14,701, the Nasdaq futures up 11.5 points to 2,842 and the S&P 500 futures rising 5.5 points to 1,582.

The Federal Reserve wraps up its two-day meeting Wednesday and investors are increasingly confident that the central bank will signal it doesn’t intend to wrap up its third round of quantitative easing soon. That easing has taken the form of the Fed spending US$85 billion a month on mortgage backed securities and government Treasurys to keep long term rates low and encourage lending.

Traders will also be anxious to gauge the Fed’s assessment of the American economy over the next few months.

“The statement will likely acknowledge the emerging domestic soft patch,” said BMO Capital Markets senior economist Michael Gregory.

“With memories of the 2011 and 2012 soft patches still fresh in mind, along with the Fed’s reaction to increase monetary stimulus, any such talk will be considered constructive for fixed income markets.”

There are also high hopes that the European Central Bank will announce a rate cut on Thursday amid deteriorating economic conditions across the eurozone. Analysts think a cut of 0.25 of a point to 0.5 per cent could be in the cards, which would be the ECB’s first rate cut since mid-2012 despite a deepening recession, an offshoot of the government debt crisis that is plaguing the 17-country currency union.

The major event is at the end of the week. The U.S. government is expected to announce that the economy created about 150,000 jobs in April, with the unemployment rate holding steady at 7.6 per cent.

Also on Friday, Statistics Canada releases its reading on economic growth for February. Economists forecast that gross domestic product rose by 0.2 per cent over the month following a similar rise in January.

On the earnings calendar, Suncor Energy (TSX:SU) hands in first quarter earnings Monday with analysts expecting net earnings of $1.01 billion or 71 cents a share, compared to profits of $321 million, or 66 cents per share a year earlier.

But beyond that, investors are anxious to see the energy giant return some money to them in the form of a significant dividend increase since the company has deferred spending on projects.

Canadian Natural Resources (TSX:CNQ) also posts earnings this week.

Outside of the energy sector, other companies handing in earnings this week include Kinross Gold (TSX:K), grocer Loblaw Cos. (TSX:L), First Quantum Minerals (TSX:FM) and Manulife Financial (TSX:MFC).

Prices were higher across the board on commodity markets Monday morning with the June crude contract on the New York Mercantile Exchange ahead 37 cents to US$93.37 a barrel.

July copper in New York gained five cents to US$3.24 a pound.

Gold prices also advanced amid a weak U.S. dollar with the June contract in New York ahead $22.20 to US$1,475.80 an ounce.

European bourses were higher with London’s FTSE 100 ahead 0.06 per cent, Frankfurt’s DAX up 0.34 per cent and the Paris CAC 40 up 0.78 per cent.

Italy’s stock market was the big gainer Monday with the FTSE MIB index ahead 1.47 per cent with investors relieved that a new government was ready to take the helm after two months of political deadlock.

Italy’s new coalition government led by Premier Enrico Letta brings together forces from both the left and the right and will begin its work after a confidence vote later Monday in Parliament.

As the third-biggest economy among the 17 European Union countries that use the euro, Italy is hugely important to the future of the single currency.

And in another sign of optimism, the yield on the country’s benchmark 10-year bond dropped around 0.10 percentage point to 3.93 per cent. That’s the first time it has dropped below four per cent since November 2010.

Earlier in Asia, Australia’s S&P/ASX 200 gained 0.6 per cent and Hong Kong’s Hang Seng edged up 0.3 per cent. South Korea’s Kospi lost 0.2 per cent. Markets in mainland China and Japan were closed for holidays.

In corporate news, Capstone Mining Corp. (TSX:CS) is spending US$650 million in cash to buy a copper mine and an associated railway in Arizona from a subsidiary of BHP Billiton. Capstone says the purchase of the Pinto Valley copper mining operation and the San Manuel Arizona Railroad Co. will immediately vault it into a position as an intermediate copper producer.